Which comes first for Polkadot? (DOT Price Analysis)
polkadot‘s recent price action was characterized by light movement and minimal volatility, following a rapid decline towards the $6 level. However, the cryptocurrency finds itself at a crucial juncture, with a potential breakout likely to determine its next direction.
Polkadot Price Analysis: Technicals
By Shayan
Daily Chart
A thorough analysis of the daily chart reveals a period of consolidation around $6, marked by low volatility and indecision in the market. This indicates an impending struggle between buyers and sellers and signals that a significant move is coming.
Despite this uncertainty, Polkadot price is currently supported by a strong and stable range; It is supported by the key 200-day moving average at $6.93 and the critical support level at the 0.618 Fibonacci level ($6.7). This strong support zone is supported by significant demand and has the potential to sustain further downside pressure, potentially pushing the price towards the significant resistance zone around $9.
Source: TradingView
4-Hour Chart
A detailed examination of the 4-hour time frame reveals a rapid decline towards the $6 level, where the price encountered significant demand and led to a slight reversal. However, the subsequent horizontal consolidation phase saw minimal volatility and a lack of decisive momentum.
However, the price formed a sideways triangle formation with a break above its upper limit, indicating the continuation of the upward trend.
Currently, DOT is on the verge of breaking above this triangle formation. In such a situation, Polkadot is expected to continue its upward trend; potential targets lie in the price range defined by the Fibonacci levels of 0.5 ($7.4) and 0.618 ($7.8).
Conversely, a break below the lower border of the triangle formation could signal a continuation of the downtrend towards the $6 level.
Source: TradingView
Sentiment Analysis
By Shayan
The significant impact of the perpetual futures market on Polkadot’s price dynamics cannot be ignored. Most short-term price movements, especially those following periods of consolidation, result from liquidations in the futures market. Therefore, understanding where liquidity is most concentrated can provide valuable information.
The Binance DOT/USDT liquidity heat map provides a visual representation of price levels where large-scale liquidation events are likely to occur. Those highlighted in yellow on the chart indicate a range of liquidation potential.
As shown in the chart, the $7 and $6 price zones are characterized by a significant amount of liquidity. As a result, if the price rallies towards the $7 threshold, this could trigger a significant liquidation process, resulting in increased volatility and a significant decline in the short term. Conversely, if the market pulls back towards the $6 level, a rapid rally could occur due to a long series of liquidations, leading to a sudden rally.
These levels serve as important reference points in the short term and have the potential to shape the market trend in the coming weeks.
Source: Coinglass
SPECIAL OFFER (Sponsored)
LIMITED OFFER 2024 for CryptoPotato readers on Bybit: Use this link to sign up for Bybit Exchange for free and open a $500 BTC-USDT position!
Disclaimer: The information contained on CryptoPotato belongs to the authors quoted. They do not represent CryptoPotato’s views on buying, selling or holding any investment. It is recommended that you do your own research before making any investment decisions. You use the information provided at your own risk. See Disclaimer for more information.
Cryptocurrency charts from TradingView.
#Polkadot #DOT #Price #Analysis