Here are the Critical Levels to Watch After the 8% Weekly Drop
Polkadot‘s price faced significant selling pressure, leading to a notable decline below the critical $6 support zone. Price action points to a potential continuation of the downtrend in the short term, although there are currently no signs of recovery.
Technical analysis
By Shayan
Daily Chart
The daily chart shows a significant increase in selling momentum that has pushed polkadot‘s price below the critical $6 support level and out of the multi-month triangle pattern. This breach triggered a significant lengthy liquidation event.
The price is not showing any signs of recovery on the daily timeframe, suggesting a possible continuation of the downtrend. However, a slight and temporary pullback to the broken $6 threshold could occur, confirming the breakout and solidifying the bearish scenario.
Basic Levels to Follow:
- Primary Target: Key support zone at $5.
- Resistance: Important resistance lies at $6.
Source: TradingView
4-Hour Chart
On the 4-hour chart, Polkadot’s price action shows a clear pattern of lower lows and lower highs, indicative of a distinct bearish trend and ongoing seller dominance.
The cryptocurrency has retreated within a bearish price channel, underscoring continued selling interest among market participants. Despite the downtrend, the price approached the important support area around $5.5, which has historically been important as support in many cases.
If the selling pressure intensifies and breaches the $5.5 support level, Polkadot could see further declines, targeting the key $5 support zone.
Alternatively, with price movements remaining limited between the $5.5 support and the upper boundary of the descending channel, a scenario of temporary consolidation near this important support seems plausible.
Source: TradingView
Sentiment Analysis
By Shayan
Polkadot has been in a strong downtrend for the past few weeks and has ultimately fallen below the critical $6 threshold. Understanding the key drivers of this bearish move is crucial for investors to gauge market sentiment and predict future price movements.
The accompanying chart highlights potential liquidation levels in Polkadot’s price action, which could provide valuable insight into smart money’s focus areas in the medium term.
There is significant liquidity above $7.3, which is the high level where the current sudden downtrend began. This area is likely filled with buy-stop orders, indicating significant selling activity and aggressive short positions.
These liquidity pools above $7.3 indicate a strong bearish trend in the market. Despite the ongoing downward trend, sellers will eventually need to realize their profits. This often leads to periods of consolidation and pullbacks to a potential uptrend.
Source: Coinglass
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Cryptocurrency charts from TradingView.
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