Calm before the storm? DOT Price Looks Ready for Breakout After 4% Rise (Polkado)
Polkadot‘s horizontal consolidation phase has extended and the price is stuck between the crucial resistance zone at $7.4 and the critical support zone at $6.4.
A valid ascent from this range is mandatory to determine the DOT’s upcoming orbit.
Technical analysis
By Shayan
Daily Chart
A comprehensive review of polkadot‘s daily chart reveals that the horizontal consolidation phase has been extended, creating uncertainty regarding the future direction of DOT in the market.
The price is bound by the critical resistance at $7.5 and the critical support at $6.4, which is aligned with the key 200-day moving average.
Recently, DOT found support near the lower end of this range and recovered significantly to reach the upper threshold. If buyers can push the price above the $7.4 resistance and the 200-day MA, a sustainable uptrend could follow.
Conversely, if supply increases, a downward trend towards the lower bound becomes possible. Price action around this key resistance zone will determine the short-term trajectory of the cryptocurrency.
Source: TradingView
4-Hour Chart
In the 4-hour time frame, Polkadot fluctuated in a rising wedge formation for a long time. Recently the price found support near the lower boundary of the wedge. Following the revival of demand, DOT experienced an increase, falling towards the critical resistance zone containing the 0.5 Fibonacci level.
This resistance has been a significant hurdle maintaining upward momentum during the recent consolidation phase. If the buyers manage to break through this, the next target will be the upper limit of the wedge in the medium term.
Conversely, a bearish trend reversal could lead to another downward move targeting the lower boundary of the wedge. A valid breakout from this formation is required to determine the upcoming direction of the price.
Source: TradingView
Sentiment Analysis
By Shayan
Amid the uncertainty surrounding Polkadot’s price trajectory, it is crucial for market participants to analyze futures market sentiment to assess the future potential of the cryptocurrency. The accompanying chart shows the liquidation heatmap metric, highlighting where the most liquidity is located.
Analyzing the chart, it becomes clear that during the horizontal consolidation period, a significant amount of liquidity was generated above the high of the $7.5 range, which consisted of a large number of buy-stop orders. As a result, Polkadot buyers could target this potential level of liquidity in the short term, possibly triggering a notable short-squeeze event.
However, closely examining price movements at this critical juncture is crucial to determine the upcoming direction of the cryptocurrency. It is worth noting that a false breakout may occur, aiming to clear liquidity and causing a cascading effect, potentially manipulating the market.
Source: Coinglass
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Cryptocurrency charts from TradingView.
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