As an experienced analyst, I believe that the recent bearish sentiment in Polkadot’s market is a cause for concern. The sudden breach below the crucial $6 support level has triggered a wave of long liquidations and could potentially lead to a sustained bearish trend.
Polkadot is currently experiencing weak demand and heightened selling, signaling a pessimistic outlook among investors. A sudden drop below the significant $6 support level has transpired, instigating a wave of long position closures. If this downward trend continues without interruption, it could potentially result in an extended bear market. However, if this breakdown proves to be a false signal, the market direction may change accordingly.
Technical Analysis
By Shayan
The Daily Chart
The daily graph shows that Polkadot has encountered intense selling pressure around the crucial $6 price mark and has suffered significant bearish corrections, signaling insufficient buying interest.
As a crypto investor, I’ve noticed that the price has broken through the significant $6 support level. This development aligns with the lower edge of a multi-month triangle and coincides with previous major swing lows. From my perspective, this bears a strong bearish signal.
The 100-day moving average is almost dropping below the 200-day moving average, forming what’s called a “death cross.” This occurrence reinforces the existing pessimistic market outlook. If this trend continues with a successful price decline, it could lead to a prolonged downturn in prices.
The 4-Hour Chart
On the 4-hour chart, Polkadot encountered strong resistance at its $6.8 supply area following a powerful uptrend. As a result, it retreated back to the previously breached region, confirming the initial price break and demonstrating control from sellers.
As I approached the significant $6 mark, the downward pressure started to ease slightly, causing minor oscillations in price. At this key resistance level, a descending wedge formation emerged on the chart, indicating the possibility of an upcoming bullish trend reversal.
Despite the previous trend suggesting that the price would hold above the significant support level of $6, sellers managed to push through and break below this boundary. This unexpected move could potentially be a bear trap, where the market appears to be heading in a certain direction but then reverses course.
Based on current market conditions, if the price action in the near future results in a pullback that fails to surpass the $6 threshold, it is likely that the downtrend will persist.
Sentiment Analysis
By Shayan
As a crypto investor, I’ve noticed that Polkadot’s price has been experiencing substantial bearish pressure lately, causing it to drop below the essential $6 support level. To get a better understanding of where Polkadot might be heading next, I believe it’s crucial to examine the sentiment in the futures market. By doing so, we can gather valuable insights into the potential future direction of this digital asset.
The accompanying chart presents Polkadot’s price alongside the Open Interest (OI) and Funding Rates metrics. The recent bearish descent is mirrored by a significant plunge in the OI metric, reaching its lowest value. This indicates a lack of interest from market participants in taking aggressive long positions, suggesting that the futures market has cooled down with minimal activity.
In most cases, this situation isn’t beneficial for prices when they come with pessimistic or close-to-zero funding rates. A small open interest and negative funding rates usually indicate a dominant bearish attitude among traders. If market conditions don’t improve in the coming days and bring back demand, it’s likely that the downtrend will persist.
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2024-06-18 15:22