According to CryptoPotato, Polkadot's recent price action has been marked by steady yet uncertain movements within a defined range, indicating a balance between buyers and sellers. A decisive breakout from this range is crucial to determine its future trajectory. On the daily chart, Polkadot has been confined within a defined range, with the $6 support and the $7.5 resistance serving as significant boundaries. This sideways movement suggests a period of consolidation, where buyers and sellers are evenly matched, leading to uncertainty about the cryptocurrency's next move.
Despite a bullish rebound towards the upper boundary of the range, which coincided with the 200-day moving average, selling pressure emerged, resulting in a rejection. This implies that the price is likely to continue declining towards the lower boundary of the range in the short term. However, a breakout from this range is necessary to provide clarity on Polkadot's future prospects.
On the 4-hour timeframe, Polkadot has formed an ascending wedge pattern following a period of sideways consolidation between the key $6 support level and the significant resistance marked by the 0.5 Fibonacci level at $7.5. This development has raised concerns about the continuation of the preceding bearish trend if the lower threshold of the wedge is breached. As a result, intensified selling pressure has been observed near the crucial resistance level of $7.5, leading to a bearish reversal, with the lower trendline of the wedge serving as the next target. If sellers succeed in breaking this critical dynamic support, a resumption of the initial bearish trend becomes increasingly likely. Conversely, if demand strengthens, continued sideways consolidation appears to be the most probable scenario.
Understanding the perpetual futures market dynamics is crucial for grasping short-term price movements in cryptocurrencies like DOT. Liquidation events in this market often drive significant price shifts, particularly after periods of consolidation. Currently, a notable liquidity pool is observed above the $7.5 level. If the price reaches this region, it could trigger a significant liquidation event, leading to a rapid downturn. Following the ongoing consolidation phase, the price might experience a short-term pullback toward this level. However, for longer-term projections, it's essential to analyze how the price reacts to this zone carefully. Market dynamics can shift rapidly, and nothing is guaranteed at this juncture.
