Polkadot Faces Key Resistance as Selling Pressure Mounts
Polkadot buyers have struggled to break past the critical resistance level at $7.5, resulting in a notable 7% decline. With increased selling pressure, the cryptocurrency now finds itself at a pivotal support level, setting the stage for crucial price action that will determine its future trajectory.
Technical Analysis
The Daily Chart
- On the daily chart, Polkadot buyers have been unable to overcome a key resistance zone that includes the 100-day moving average at $7.6.
- This resistance zone, spanning the price range between the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels, has seen significant selling pressure.
- The intense selling activity led to a 7% price drop, signaling bearish market sentiment.
- However, Polkadot has reached a crucial support zone near $6.5, filled with demand that could counteract further declines.
The 4-Hour Chart
- Examining the 4-hour chart, Polkadot formed an ascending wedge pattern during a multi-month consolidation phase.
- After facing rejection at $7.5, the price broke through the lower boundary of the wedge, triggering liquidation of long positions.
- The price is now at a critical support area around $6.5, preceded by significant daily swing lows.
- A period of consolidation near this support level is likely before the next major move.
Sentiment Analysis
Amidst a period of consolidation near $6.5, Polkadot has absorbed considerable liquidity following a sharp decline. Analysis of futures market metrics, particularly the DOT/USDT Binance liquidation heatmap, reveals valuable insights into potential price movements and liquidity levels.
- The heatmap shows significant liquidity absorption between $6.5 and $6, leading to the liquidation of numerous long positions.
- Lack of substantial liquidity below $6 suggests a cooling-off period in the futures market.
- Notably, there is significant liquidity near $8, indicating a potential resistance level if a bullish trend emerges.
Hot Take: The Road Ahead for Polkadot
As Polkadot grapples with resistance at $7.5 and crucial support at $6.5, the upcoming price action will be pivotal in shaping its future trajectory. Traders and investors should closely monitor key levels and market sentiment to gauge the cryptocurrency’s next moves.
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