Polkadot Price Analysis: DOT Explodes 13% in the Week But Is the Worst Really Over?
polkadot has rallied towards a key resistance zone marked by the upper boundary of the multi-month wedge and the $6.4 threshold.
This area is likely filled with significant supply, which will stall the upward momentum in the short term and lead to a temporary sideways consolidation phase.
Technical analysis
By Shayan
Daily Chart
A detailed analysis of Polkadot’s daily chart shows a significant price rally from the critical support of $5.5, likely driven by aggressive long positions in persistent markets.
This increase has pushed the price towards a key resistance zone where a successful breakout could lead to a significant shift in market sentiment. This resistance includes the upper boundary of the multi-month wedge at $6.49 and the static resistance zone at $6.4.
This area, which was previously a significant demand zone, now acts as a significant barrier, possibly creating significant selling pressure as the price approaches from below. As a result, a temporary period of lateral consolidation is likely to occur in the short term before the price begins its next big move.
Source: TradingView
4 Hour Chart
The 4-hour chart provides additional insight into Polkadot’s price action. After finding support near the $5.5 threshold, the cryptocurrency started a strong uptrend and formed higher highs and higher lows, indicating a bullish reversal in this time frame. This move formed a bullish trendline that supported the recent rally.
However, the price has now reached a critical range and is capped by the resistance of the previous major swing high at $6.42 and the dynamic ascending trend line.
A breakout from this range is imminent and will clarify the direction of the next major trend. If the price faces a downtrend and violates the uptrend, it is likely to be followed by a consolidation phase in the $6.4-$5.5 price range.
Source: TradingView
Sentiment Analysis
By Shayan
Polkadot has seen an increase in demand recently, leading to a significant increase towards its previous high of $6.4. Understanding the key drivers of this rise is vital to determining whether the current uptrend will be sustained in the medium term.
The attached chart shows Polkadot’s price along with Open Interest (OI) and Funding Rate metrics. The recent uptrend and slight uptrend were briefly driven by a moderate increase in purchasing activity in permanent markets, as evidenced by the slight rise in the OI metric and positive funding ratios.
However, for the price to enter a strong and sustainable uptrend, a significant increase in both OI and funding rates, similar to the conditions observed in March 2024, is required. The current bullish momentum is not yet sufficient and the market needs more buying activity in the futures market to sustain and strengthen the uptrend.
Source: Coinglass
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