DOT traders should consider reading this before making any move

Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is the opinion of the author only

  • Polkadot (DOT) found a new support at $5.0
  • Negative sentiment can undermine an effective price recovery

After breaking through several supports, Polkadot (DOT) finally found a quiet area at $5.0. At press time, DOT is trading at $5.38, up 5% in the past 24 hours. The rally corresponds to BTC’s recovery of the $16K level.

Read Polkadots [DOT] Price forecast 2023-24

Although prices have rebounded at the time of writing, the market structure remains weak. Therefore, DOT might continue falling to its new support at $4.4.

new support for $5; will continue?

Source: DOT/USDT, TradingView

DOT recorded an impressive rise between October and November, ending with an ATH of $7.42. However, the bearish sentiment after the FTX crash caused the asset to collapse.

It found a support area at $5.4, from which the bulls attempted to recover two prices. However, the two recovery attempts ended in a bearish order block around the 23.6% Fibonacci level ($5.58). The price correction after the second recovery attempt fell below the previous support level, making DOT a bearish market structure.

At press time, DOT is about to break above the $5.3 level. However, the current bear market structure could push the price towards $5 or as low as $4.44 in the coming days or weeks. The Relative Strength Index (RSI) was at 38, which indicates that the sellers have leverage.

Daily trading volume has also posted a series of declines since mid-September. Ergo, both of them show that the market is still soft, which favors the sellers.

However, the bearish slope will be invalidated if DOT breaches the 23.6% Fibonacci retracement level ($5.58) on the intraday close. In this case, the new resistance target for DOT will be the bearish order block area around the 38.2% Fibonacci retracement level.

Negative emotions and slowed down development activity

Source: feeling

according to feelingsDevelopment activity at the Ministry of Transport bottomed out on November 7 before recovering until mid-November. It has declined steadily thereafter, with a sharp downtrend at the time of writing. Interestingly, the price action has largely followed the development activity.

In addition, the weighted sentiment overall was negative at the time of publication. Due to the decrease in trading volume as the price of DOT rises, the price-volume differential can undermine the strong buying pressure. This may indicate a possible price drop or deeper decline.

If BTC holds $16,000 or breaks $17,000, DOT may continue its continued upward trend. However, the price gap and the magnitude of the negative sentiment could undermine any significant buying pressure that could turn the current market structure to the upside.

So long-term DOT investors should be careful and watch BTC, market sentiment, and development activity for the asset.

Leave a Reply

Your email address will not be published. Required fields are marked *