As an experienced analyst, I closely monitor the cryptocurrency market and have been following Polkadot’s price action with great interest. The prolonged consolidation phase around the pivotal $6.3 support level and the 200-day moving average has left many investors uncertain about its future trajectory.
Polkadot has been stuck in a lengthy period of price stability, hovering near the significant 200-day moving average and the $6.3 level. This holding pattern suggests apprehension among investors about the cryptocurrency’s upcoming direction.
If the price falls below this important level of support, it may lead to a downtrend reaching the $5.1 mark.
Technical Analysis
By Shayan
The Daily Chart
An in-depth analysis of the day-to-day price chart reveals a stretch of indecision and horizontal trading around the pivotal $6.3 mark, as well as the 200-day moving average.
It’s intriguing to note that the price chart exhibits an ascending wedge formation, a well-known bearish indicator, implying possible control by sellers in the market.
If sellers manage to break through the lower boundary of the wedge, there’s a strong likelihood that the price will trend downward towards the important support level at $5.1. On the other hand, an unexpected bullish move could lead buyers to aim for the significant 100-day moving average, which is approximately around $8.1 in the near term.
The 4-Hour Chart
In the last 4 hours, Polkadot’s price drop reached a significant level of resistance at around $6. Following this, there was a strong rebound indicating a bullish turnaround.
After a run-up in price, it has hit a roadblock at the important resistance area marked by the $7.4 (0.5 Fibonacci level) and $7.8 (0.618 Fibonacci level) lines.
a support level at $6 and a resistance level at $7.4.
Within this price range, the cryptocurrency’s current behavior provides crucial insight into its potential future trajectory. A surprising spike above the $7.4 and $7.8 levels, which correspond to the 50% and 61.8% Fibonacci retracement levels respectively, could be a strong indication of an impending bullish trend in the medium term.
Sentiment Analysis
By Shayan
With the recent significant decline leading to a prominent level of support, traders are likely considering the mood within the futures market. The graph below presents the Daily Open Interest and Daily Liquidations data in conjunction with Polkadot’s price.
As a researcher studying market trends, I’d like to emphasize that the recent dramatic drop in prices was primarily driven by the aggressive actions of short sellers. The chart illustrates this downturn leading to a large-scale liquidation of long positions, ultimately resulting in a major long squeeze. This sequence of events caused the Open Interest metric to decline significantly, suggesting a cooling-off period for the perpetual markets.
As a researcher studying the futures market, I’ve noticed that there are opportunities for both buying (long positions) and selling (short positions) currently available. This setup could result in substantial price fluctuations in the intermediate term.
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2024-05-06 16:06