Bears Appear to be in Control, Is DOT About to Drop to $6.5? (Polkadot Price Analysis)
A sustained consolidation near the key $7.4 resistance zone indicates an ongoing struggle between polkadot buyers and sellers.
However, the market is at a critical point as the upcoming price action sheds light on DOT’s future prospects.
Technical analysis
By Shayan
Daily Chart
A detailed examination of Polkadot’s daily chart reveals an uncertain market situation as the price is trending around a key resistance marked by the $7.4 level and the important 100-day moving average. Additionally, the RSI indicator is consolidating near the 50 threshold, indicating a balance between buyers and sellers in the market.
Currently, the market is in a decisive position and participants are expecting a short-term rejection towards the $6.5 threshold. However, an unexpected rally above this critical resistance zone could trigger a major short squeeze, increasing bullish momentum.
4-Hour Chart
The 4-hour chart shows a prolonged slight rise in which the price has formed a rising wedge formation. This well-known pattern of following a steep decline usually indicates a potential continuation of the initial downtrend if it breaks through its lower boundary.
Currently, DOT is struggling with significant resistance capped by the 0.5 ($7.4) and 0.618 ($7.6) Fibonacci retracement levels and has failed to break them. Given the muted price action and lack of bullish momentum, Polkadot is expected to undergo a pullback, targeting the lower bound of the formation.
Sentiment Analysis
By Shayan
When the market is in a state of uncertainty and lacks a clear direction, analyzing persistent market sentiment can provide insights into Polkadot’s potential future trajectory. This chart shows the DOT price as well as the Long/Short Account Ratio.
In general, the total value of long and short positions in the market is balanced. The fact that this value is equal but the number of owners is different indicates that the side with more owners has a smaller average position value, consisting mainly of retail investors, while the other side is dominated by institutional investors and large traders.
The Long/Short Account Ratio has recently decreased and reached 3. This means that the number of people holding long positions is three times more than those holding short positions, while the total position value remains equal on both sides. This suggests that the long side consists primarily of retail investors with smaller average position sizes, while the short side consists of institutional investors with possibly larger average positions.
On the other hand, the decrease in the metric indicates a slight increase on the short side in the average position size of institutional investors. If this trend continues, it could indicate increased institutional interest and lead to increased selling pressure for Polkadot.
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