Polka dot [DOT] Sees some relief coming to $5, but can bulls hold on?

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

  • The $5.07 level has been under siege since November 21st.
  • Subsequent weak bounces from the level indicated that the bears may finally break through to the south.

Polkadot buyers have been weak on the price charts and have been unable to effectively stop the bears’ rally in recent months. Once again, they were fighting for control of a vital level near the $5 mark.

Read Polkadot’s 2023-24 price forecast

Polkadot has remained popular on social media and continues to be in the top ten searches LunarCrush. But this did not translate into bullish price movement. A return above $5.3 would change the structure of the DOT market on the 1-day chart to the upside, but it is unlikely based on the available evidence.

The breakout formation over the next few days might give the bears an opportunity to short the DOT position

Source: DOT/USDT on TradingView

At the time of publication, the Polkadot bulls were struggling to stay afloat above the $5 level. It was an important psychological level that also coincides with a horizontal level for the longer time frame. If the price falls below this mark, the selling wave may intensify and push the prices down further.

On November 28, DOT formed a bullish order block near the $5 mark. The move to $5.62 on December 2 confirmed the importance of the $5.1-5.3 range. Closing the daily session below its area may turn the market structure into a downtrend. The command block will also become a bearish categorical.

This was a possible scenario based on the indications. A/D saw a sharp decline in November and has been stable since then. Meanwhile, the Awesome Oscillator showed bearish momentum, albeit a weak one.

Overall, the conclusion was that demand was tight and selling pressure could slowly drive down Polkadot’s prices. Therefore, a move below $5 and a retest of the bearish break can be used to enter short trades targeting the next higher timeframe support level at $4.6. Invalidating this idea might lead the price back above $5.3.

Futures markets have indicated some bearish sentiment in recent days

Polkadot Sees Some Breathing Room At $5 But Can The Bulls Hold On?

Source: Coinglass

Open interest behind DOT contracts against USDT decreased significantly from November 8th onwards on Binance. It picked up again on the 24th of November and headed upwards gradually until the 11th of December. During this time, Polkadot fluctuated between $5.7 and $5.1.

DOT had a negative funding rate on Binance. In recent days, OI has been declining while the price has remained between $5.07 and $5.19. Until the OI rises along with the rise of the DOT, the index will be dampening in the long term and the sentiment bearish.

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