The bullish bounce by Polkadot's DOT buyers from the $6.6 support level which took it above the $7.7 resistance was short-lived with bears quickly reclaiming the resistance level.
DOT had been on an extended dip after a price rejection at the $9 price level before bulls halted the selling wave at the $6.6 support level. However, the short-term conviction for DOT seems to have shifted bearish as price faltered again at the $8.5 price zone. This created a descending trendline on the four-hour timeframe.
Can bulls recover again or will bears extend short-term bearish momentum?
Over the past two days, the RSI (Relative Strength Index) remained under the neutral 50. This showed a weakening of the buying pressure and an increase in the selling pressure.
Furthermore, this was amplified by the sharp departure of capital from DOT. The CMF (Chaikin Money Flow) which tracks the inflow and outflow of capital from tokens showed a sharp drop from positive (+0.30) to negative (-0.14).
Along with its price action, it hinted at an extension of the bearish pressure in the near term. Traders looking to trade against the market trend can look for shorting opportunities on a retest of the $7.7 resistance with 11% gains available if price sinks to the $6 price level.
This oscillating price action between the $6.6 support and $7.7 resistance could also offer range trading opportunities for DOT traders in the short term.
On the flip side, if longs can scale the selling pressure at the $7.7 resistance, a recovery to the $9 price zone could be a possibility. This would be dependent on breaking above the bearish trendline around the $8.3 to $8.5 price zone.
Levels to consider:
Short: $7.7 to $6.6 (11% gains)
Long: $7.7 to $9 (17% gains)