According to CryptoPotato, Polkadot has been experiencing a prolonged bearish pullback, with its price hitting a significant support area that includes the 100-day moving average and the 0.618 Fibonacci retracement level. Despite this downturn, several indicators suggest a potential resurgence towards the crucial $10 mark. A detailed analysis of the daily chart shows Polkadot's sustained bearish retracement following its impressive climb to the yearly high of $11.9. However, upon hitting a significant support zone marked by the 100-day moving average and the critical 0.618 Fib level at $8.2, the downward momentum decreased, resulting in minor price fluctuations.
The convergence of these support levels indicates strong demand at this pivotal threshold, accompanied by a notable presence of sell-stop liquidity beneath it. As a result, the price seems likely to tap into this prevailing liquidity and initiate a fresh upward movement, targeting the pivotal $10 resistance region. However, it's important to note that a sudden breakdown could trigger a cascade effect, potentially leading to further declines.
A comprehensive analysis of the 4-hour timeframe reveals Polkadot's corrective retracements. The price recently found support near the crucial $8 level, prompting a modest rebound. Notably, amidst these corrections, a falling wedge pattern has emerged, typically signaling a potential bullish reversal upon a breakout from its upper boundary. However, Polkadot's price faced rejection from the wedge's upper boundary, resulting in a minor downturn. Consequently, it seems likely that the price will continue to fluctuate within this critical wedge pattern and around the significant $8 support zone until a breakout occurs.
The liquidation of positions in the perpetual futures market stands as a pivotal catalyst for price fluctuations. Understanding high liquidity in the order book offers an advantage, gauging the liquidation levels of traders provides valuable insights. A liquidation heatmap for the DOT: USD pair, offering projections on significant liquidation zones. Upon analysis, it becomes evident that a substantial concentration of liquidity resides near the critical resistance zone at $10. This clustering of liquidation levels around the $10 price range suggests a probable movement towards that threshold in the medium term. However, it's essential to acknowledge the potential for a bearish scenario involving a sustained downtrend towards lower levels, which cannot be discounted.