According to CryptoPotato, Polkadot's bullish momentum recently faced a setback at the $7.5 resistance region, leading to a 12% decline. However, the price action of DOT suggests that the mid-term consolidation stage is likely to continue. A detailed analysis of Polkadot's daily chart reveals a period of uncertainty, with the price showing a prolonged sideways movement within the range defined by the $7.5 resistance and the $6.2 support. This consolidation stage represents a balance between buyers and sellers, as confirmed by the RSI indicator hovering around the 50 mark.
Recently, the price faced rejection around the critical $7.5 resistance level and the significant 100-day moving average, resulting in a notable decline. However, in a broader context, the price is expected to continue consolidating within the decisive range marked by the $7.5 resistance and the $6.2 support. A definitive breakout from this range is crucial to set the direction for a sustained trend.
On the 4-hour chart, Polkadot's price failed to reclaim the crucial resistance region defined by the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels, leading to a significant rejection and initiating a bearish retracement towards the lower boundary of the ascending wedge at $7. Upon reaching this decisive support threshold, the price encountered slight buying pressure and demand, resulting in a minor reversal. However, the momentum isn't sufficient for the reversal to be valid. As the price approaches a tight, narrow range marked by the wedge’s lower boundary and the 0.5 ($7.1) Fibonacci level, the upcoming price action will determine the next move. A breakout in either direction looks imminent.
Analyzing the futures market metrics alongside Polkadot’s price fluctuations can provide valuable insights for traders. During the recent prolonged consolidation stage, both the Polkadot Funding Rates and Open Interest metrics fluctuated near their lowest values, indicating a period of low activity and uncertainty. However, most recently, both these metrics have initiated a rise, suggesting heightened activity in the futures market. The increase in these metrics indicates that long orders may become more aggressive, reflecting a shift in market sentiment towards a more bullish outlook. If this behavior continues, it could lead to a bullish trend, ultimately breaking Polkadot out of its prolonged and exhausting sideways range.