Polkadot (DOT) is currently experiencing a challenging price downturn, struggling to maintain momentum amid broader market uncertainties. Recently, DOT broke out of an ascending channel, which has reinforced a bearish sentiment among traders. As of now, DOT is trading around $4.03, reflecting a 1.3% decrease over the past 24 hours.
Polkadot faced continuous resistance near the $4.1 mark, where bulls have been unable to overcome the crucial Exponential Moving Averages (EMAs). This inability to breach the resistance has triggered a pullback, pushing the price below both the 20-day and 50-day EMAs. As a result, these EMAs have now become immediate hurdles for any upward movement. With the near-term EMAs trending downward, selling pressure appears to be on the rise.
A critical level to watch is the $3.9 support. If DOT closes below this level, it could lead to further losses, potentially testing the multi-year low range of $3.5 to $3.6. A breakdown beneath this threshold could open the door to even more significant corrections, which would be detrimental for Polkadot buyers.
Conversely, if bulls manage to reclaim the EMAs, it could serve as a lifeline, preventing further declines. A successful retest of the $4.9 resistance level, which lies above the 50-day EMA, could signal a recovery phase for DOT.
The Moving Average Convergence Divergence (MACD) has recently shown a bearish crossover, where the MACD line has dipped below the Signal line. This technical signal suggests that sellers currently hold the upper hand in the market. Similarly, the Relative Strength Index (RSI) reinforces this bearish outlook; buyers should ideally wait for a close above the 50-mark on the RSI before considering long positions.
Analyzing the derivatives market can offer additional insights into trader sentiment. Currently, the 24-hour long/short ratio stands at 0.8671, indicating a slight bias toward short positions. However, on platforms like Binance and OKX, long/short ratios skew heavily in favor of bullish sentiment, with figures of 5.4599 and 3.6, respectively. This disparity highlights significant optimism among top traders on these exchanges, even as the market faces challenges.
Notably, DOT’s trading volume has increased by over 31% in the past day. This uptick suggests heightened activity and interest among traders, even amid price declines. Additionally, a slight increase in Open Interest (+0.46%) indicates that traders are maintaining their positions, showing resilience in the face of recent volatility.
Liquidation data reveals a higher number of long liquidations, which may imply profit-taking and increased caution among traders. This trend underscores the need for prudent decision-making as DOT struggles to maintain momentum above the $4.1 resistance.
Strategic Considerations for Buyers
Navigating the current downturn in Polkadot’s price requires a strategic approach. By monitoring key support levels, utilizing technical indicators, and assessing market sentiment, buyers can position themselves effectively in this uncertain landscape. While challenges lie ahead, understanding these dynamics can empower traders to make informed decisions in their pursuit of potential gains in the Polkadot ecosystem.
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