According to CryptoPotato, Polkadot's cryptocurrency has recently experienced a significant downturn following a rejection from its 200-day moving average. This has brought the price closer to the lower boundary of its sideways trading range, marked at $6. The price action at this juncture is crucial in predicting the cryptocurrency's next move.
A detailed analysis of Polkadot's daily chart reveals a prolonged sideways consolidation phase, with key resistance at $7.5 and critical support at $6. The price recently encountered rejection near the upper boundary of this range, resulting in a notable decline. As the cryptocurrency now approaches the lower boundary of the range, sellers are poised for a potential bearish breakout. If they succeed in pushing the price below this critical level, a sustained bearish trend could ensue. Conversely, a bullish rebound towards the upper boundary of the range becomes feasible with an influx of demand. However, the price action around this vital support zone will dictate the cryptocurrency's near-term trajectory.
On the 4-hour timeframe, following rejection from significant resistance around the $7.4 mark, the price experienced a sharp decline, nearing the lower limit of an ascending wedge. Polkadot is now teetering on the edge of breaking below this crucial demand zone, hinting at a potential fresh bearish momentum. Despite this, considerable demand near this key level leaves room for a bullish rebound, potentially leading to a retracement towards the pattern's upper trendline. If the price ultimately breaches the lower boundary of the pattern, sellers will target the range's lower threshold at $6.
Given the recent uncertainty surrounding Polkadot's price trajectory, it's vital for participants to delve into futures market sentiment to gauge the cryptocurrency's future potential. Key metrics such as Open Interest and Funding Rates in conjunction with Polkadot's daily price movements suggest that the futures market may be ripe for aggressive futures positioning, possibly triggering a substantial market shift. If the ongoing consolidation phase culminates in heightened demand and an influx of long positions, it could signal the start of a noteworthy bullish trend. Conversely, if the current steady price action results in the reinstallation of short positions, a cascade will be the most probable outcome.