Polkadot recently experienced a significant downturn triggered by increased selling activity around the 200-day moving average, leading it to touch the lower boundary of its sideways trading range.
Should this boundary be breached unexpectedly, conditions would be ripe for a continuation of the bearish trend.
Technical and sentiment analysis provide further insights into the potential future trajectory of Polkadot.
Explore the recent downturn of Polkadot and its potential future trajectory based on technical and sentiment analysis.
Technical Analysis
Examining Polkadot’s daily chart, we observed a recent bullish ascent culminating at the critical 200-day moving average of $7.4, followed by notable rejection. Subsequently, the cryptocurrency underwent a decline, ultimately landing at a substantial support area represented by the lower threshold of its sideways trading range, positioned at $6.
The Daily Chart
This lateral movement suggests the likelihood of ongoing consolidation, with a decisive and robust breakout from the $6 to $7.5 price range deemed essential for determining its future trajectory. Nonetheless, a sudden breach of the $6 support zone could initiate a cascading effect, potentially driving prices toward the $5.5 mark.
The 4-Hour Chart
Zooming in on the 4-hour timeframe, Polkadot has exhibited fluctuations within an ascending wedge pattern, bounded by the $6 to $7.5 price range. Most recently, after a brief surge, the price encountered resistance near a critical level, specifically the 0.5 Fibonacci level at $7.5, leading to a noticeable decline.
Sentiment Analysis
Polkadot has remained trapped within a consolidation range, facing repeated rejections around the critical $7.5 level. This action has stirred concerns about the future market conditions and the forthcoming direction of its price. The provided Binance DOT/USDT heatmap underscores levels where substantial liquidations might transpire. The probability of a cascading liquidation scenario heightens as the price approaches zones marked in yellow.
Conclusion
In conclusion, Polkadot’s future trajectory remains uncertain, with potential for both bearish continuation and bullish rebound. The key lies in the $6 to $7.5 price range, and the market’s reaction to these levels will be crucial in determining the next phase for Polkadot.