$DOT about to break $8?
The important resistance area of $7.5 recently stopped the bullish momentum of DOT, causing it to fall by 12%, but the price action of DOT still suggests that the medium-term consolidation phase will continue.
Looking at the daily chart of DOT, an uncertain mood can be found, and the price has been consolidating sideways for a long time in the range of $7.5 resistance and $6.2 support, lacking obvious momentum.
This consolidation phase indicates that there is a balance between buyers and sellers, which is confirmed by the RSI indicator hovering around 50.
Recently, the price encountered rejection near the key $7.5 resistance level and the important 100-day moving average, resulting in a clear decline.
However, from a broader perspective, the price may continue to consolidate in the decisive range of $7.5 resistance and $6.2 support. A clear breakout of this range will be crucial to determine the direction of the ongoing trend.
On the 4-hour chart, the price of DOT failed to reclaim the critical resistance area defined by the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels, resulting in a clear rejection and initiating a bearish retracement towards the lower boundary of the ascending wedge at $7.
After reaching this decisive support level, the price encountered mild buying pressure and demand, resulting in a minor reversal. However, the momentum was not strong enough to make the reversal valid.
As the price approaches the tight narrow range marked by the lower boundary of the wedge and the 0.5 ($7.1) Fibonacci level, the upcoming price action will determine the next move. A breakout in either direction is just around the corner.
Analyzing futures market indicators along with DOT’s price action can provide valuable insights to traders. The chart showcases the DOT funding rate and open interest indicators, which measure whether buyers or sellers are more active in executing their futures orders, thereby assessing futures market sentiment.
As shown in the chart, both indicators fluctuated around their lowest values during the recent long consolidation phase, indicating less market activity and uncertainty during this period. Recently, however, both funding rates and open interest indicators have begun to rise, indicating an increase in futures market activity.
The increase in these indicators suggests that long orders may become more aggressive, reflecting a shift in market sentiment toward a more bullish outlook.If this behavior continues, it could lead to a bullish trend that will eventually break out of DOT's long and exhausting sideways range.
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