Following the breakout on lower timeframes, Polkadot is consolidating in a falling wedge pattern on the daily timeframe.

Polkadot [DOT] broke through the $5.0 price level but was immediately rejected. This price action on the 4-hour timeframe highlights DOT’s struggle at this critical resistance point.

The $2.5 to $4 range is a psychological level that acts as both daily and weekly resistance. The DOT/USDT pair is currently rising within a parallel channel.

At press time, DOT is up 10.54% on the week. Despite the appearance of a bearish engulfing candle, signaling a possible reversal, the overall market sentiment towards altcoins remains bullish.

Falling Wedge Pattern

Additionally, DOT is consolidating within a falling wedge pattern on the daily timeframe, a structure that often signals a potential bullish reversal.

The price action of the DOT/USDT pair appears to have bottomed and could be preparing for a bullish breakout.

The next key level to watch is the upper trendline of this falling wedge, which will most likely be successfully retested before prices rise further, especially with the alt season expected in Q4 2024.

Weekly Support and Stochastic RSI

Polkadot’s [DOT] weekly support has remained strong, marking the lowest point for DOT. This support has stopped the price from falling five times, with the price falling back to this support after making higher highs.

The Stochastic RSI for DOT/USDT is currently in oversold conditions, suggesting that this week’s rally could be the start of a larger trend.

This expected upward trend could be influenced by the expected interest rate cuts, which will benefit altcoins such as DOT.

Open Interest

At press time, Polkadot [DOT] open interest shows an OI-weighted funding rate of positive 0.0046%.

This indicates bullish sentiment towards DOT as traders with long positions pay 0.0046% to traders with short positions, reflecting confidence in a price increase.

Polkadot’s open interest between the $7.917 and $8.004 price levels totals $35.838 million, while the open interest in the $5.30 to $5.39 range is $8.33 million.

Polkadot Statistics

Polkadot’s current market capitalization is $7.2 billion, with a 24-hour trading volume of $143 million and an increase of 15.13%.

This brings the volume-to-market ratio to 1.91%, indicating a stable market with minimal price volatility. The total circulating supply of DOT is 1.49 billion, matching the fully diluted market cap of $7.2 billion.

Although DOT faces a test at the $5.0 level, the overall outlook remains bullish, supported by strong technical patterns, positive market sentiment, and stable market statistics. With the altcoin season around the corner, DOT is poised for potential gains.

In simple terms

Currently, open interest and volume are increasing, indicating bullish sentiment. The falling wedge pattern signals a possible bullish reversal, and as the price bottoms out, this will set the stage for a subsequent test of the breakout resistance level, along with the expected interest rate cuts, which will benefit altcoins such as DOT. In summary, I believe that the overall outlook remains bullish in the short term, supported by strong technical patterns, positive market sentiment and stable market statistics, which is expected to support DOT prices to retest the breakout resistance level of $5.