This Key Polkadot Metric Is Dropping Along Price, What Does It Mean? (DOT Price Analysis)
After facing a significant rejection, polkadot recently reached a key support zone near its previous low of $6.
The price is currently experiencing slight fluctuations, which may cause increased volatility in the market.
Technical analysis
By Shayan
Daily Chart
The daily chart shows that after a significant 17% decline, Polkadot’s price has settled near the $6 support zone, in line with the previous major decline. This area is full of demand and once this threshold is reached the bearish momentum has diminished. The fact that the cryptocurrency has entered a period of slight fluctuations with minimal volatility indicates a struggle between buyers and sellers at this critical level.
This situation suggests that current demand may dominate supply in the short term. Therefore, a temporary period of sideways price movement appears imminent before both parties gain control and initiate the next significant move.
Source: TradingView
4-Hour Chart
On the 4-hour chart, Polkadot price experienced significant selling pressure after breaking the lower boundary of the multi-month ascending wedge formation, accelerating the bearish momentum. Once the critical $6 support zone was reached, increased buying pressure emerged, leading to slight sideways movements.
However, the price is currently forming a symmetrical triangle formation, indicating a clear lack of momentum. As the price approaches the narrowest range of the pattern, a breakout in either direction will likely determine the next short-term move. A break above this pattern could potentially lead to an uptrend towards the $6.7 level.
Source: TradingView
Sentiment Analysis
By Shayan
While Polkadot’s price failed to reach a new daily high, traders are looking for explanations. As the price reflects the struggle between buyers and sellers, information gleaned from futures market sentiment can offer valuable perspectives.
The accompanying chart shows Polkadot’s open interest, which is a critical metric for assessing futures market sentiment. Typically, higher open interest values indicate a bullish trend, while extremely high values can trigger increased volatility and potential liquidation steps.
Recently the open interest metric has peaked, indicating that the futures market is overheating. However, the last decline was followed by a prolonged liquidation, resulting in a significant decline. It is noteworthy that despite Polkadot’s downward trend, the open positions metric followed a similar trend and experienced a significant decrease. This alignment shows that activity in the futures market has cooled.
As a result, the market looks poised for a revival of long or short positions, potentially triggering a fresh and decisive market move in either direction.
Source: CoinGlass
SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive a special $600 welcome offer on binance (full details).
LIMITED OFFER 2024 on bydfi Exchange: Welcome reward up to $2,888, use this link to register and open 100 USDT-M positions for free!
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.
#Key #Polkadot #Metric #Dropping #Price #DOT #Price #Analysis