Calm before the storm? DOT Eyes This Level to Trigger Mass Liquidations (Polkadot Price Analysis)
polkadot‘s recent price movement was characterized by steady but uncertain movements within a certain range, emphasizing the balance between buyers and sellers.
However, a definitive breakout from this range is essential to determine its future course.
Technical analysis
By Shayan
Daily Chart
On the daily chart, Polkadot is stuck in a specific range with support at $6 and resistance at $7.5 forming important limits. This sideways movement indicates a period of consolidation in which buyers and sellers are evenly matched, leading to uncertainty about the cryptocurrency’s next move.
Despite an upward trend towards the upper end of the range corresponding to the 200-day moving average, selling pressure arose, resulting in rejection.
This suggests that the price will continue to fall towards the lower end of the range in the short term. Still, an exit from this range is needed to clarify Polkadot’s future expectations.
Source: TradingView
4-Hour Chart
Examining the 4-hour timeframe, Polkadot formed a rising wedge formation following a period of horizontal consolidation between the key support level at $6 and the key resistance marked by the 0.5 Fibonacci level at $7.5.
This development increased concerns that the previous downward trend would continue if the lower threshold of the wedge was exceeded.
As a result, intense selling pressure was observed near the critical resistance level at $7.5, which led to a bearish reversal, with the lower trend line of the wedge serving as the next target. If sellers can manage to break this critical dynamic support, a resumption of the initial downtrend becomes increasingly likely. Conversely, if demand strengthens, continued horizontal consolidation seems the most likely scenario.
Source: TradingView
Sentiment Analysis
By Shayan
Understanding continuous futures market dynamics is crucial to grasping short-term price movements in cryptocurrencies like DOT. Liquidation events in this market often result in significant price changes, especially after periods of consolidation. Visualizing potential liquidity zones can provide valuable insight into where these events may occur.
The provided Binance DOT/USDT heat map shows levels where large-scale liquidations could occur. The probability of a liquidation stage increases when the price approaches the areas marked in yellow. A significant liquidity pool is currently observed above the $7.5 level. If the price reaches this zone, a serious liquidation event could be triggered, leading to a rapid decline.
As a result, the price may experience a short-term pullback towards this level following the ongoing consolidation phase. However, for longer-term predictions, it is important to carefully analyze how the price will react to this zone. Market dynamics can change rapidly and nothing is guaranteed at this point.
Source: Coinglass
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Cryptocurrency charts from TradingView.
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