Here’s How Low DOT Price Could Fall If $6 Support Fails (Polkadot Price Analysis)
The recent rejection of polkadot‘s 200-day moving average triggered a significant pullback, pushing the cryptocurrency’s price closer to the lower end of its sideways trading range marked at $6.
However, price movement around this period is of great importance in predicting the next move of the cryptocurrency.
Technical analysis
By Shayan
Daily Chart
A thorough examination of Polkadot’s daily chart reveals a prolonged sideways consolidation phase with critical resistance at $7.5 coinciding with the 200-day key moving average and critical support at $6. Recently the price was rejected near the upper end of this range, resulting in a notable decline.
As the cryptocurrency now approaches the lower end of the range, sellers are preparing for a potential downtrend.
If they manage to push the price below this critical level, a sustained downtrend could emerge. Conversely, with the flow of demand, an upward trend towards the upper end of the range becomes possible. However, price action around this vital support zone will determine the short-term trajectory of the cryptocurrency.
Source: TradingView
4-Hour Chart
Following the rejection of key resistance around $7.4, which includes the 0.5 Fibonacci level and the upper boundary of the ascending wedge, the price declined sharply on the 4-hour time frame, approaching the lower boundary of the wedge.
However, Polkadot is now on the verge of breaking below this important demand zone, signaling a potential new bearish momentum.
Despite this, significant demand near this key level leaves room for a bullish recovery, potentially leading to a pullback towards the upper trend line of the pattern. However, if the price ultimately breaks through the lower end of the pattern, sellers will target the lower threshold of the range at $6.
Source: TradingView
Sentiment Analysis
By Shayan
Given the recent uncertainty surrounding Polkadot’s price trajectory, it is vital that participants investigate futures market sentiment to gauge the cryptocurrency’s future potential. The accompanying chart shows Polkadot’s daily price movements along with key metrics such as Open Interest and Funding Rates.
When we analyze the chart, it becomes clear that concurrent with the horizontal consolidation period, both Open Interest (OI) and funding rates have fallen significantly and are fluctuating near their lowest points.
The significant decline in both metrics indicates that the futures market may be ripe for aggressive futures positioning, possibly triggering a significant market shift.
Therefore, if the ongoing consolidation phase results in increased demand and long interest influx, this could signal the beginning of a notable uptrend, with eyes turning to higher price targets. On the other hand, if the current stable price movement results in the reestablishment of short positions, a bracketing would be the most likely outcome.
Source: TradingView
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Cryptocurrency charts from TradingView.
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