$DOT Polkadot is making some noise in the market right now. A massive short liquidation of $1.7245K took place at the price of $7.498, which means that a lot of short positions were forced to close due to the price rising. This could potentially signal a shift in the market, so let’s break it down and see what’s next.

What Does This Mean.

When short positions get liquidated, it means that traders who were betting on the price of falling are losing their positions as the price moves against them. This can sometimes lead to a short squeeze, where the price of can rise rapidly as traders are forced to buy back to cover their short positions. This could push the price upwards, creating a potential trading opportunity.

What’s Next for $DOT.

Now that we’ve seen a short squeeze, here’s what could happen next.

1. Buy Zone.

Look for a good entry point to buy. Based on current price action, a buy zone could be between $7.20 - $7.40. This is where you might see some support, especially after the recent surge, and if the price retraces a bit before going higher.

2. Target.

The target for $DOT could be $8.00 - $8.30, which is a reasonable area of resistance. If the price breaks above this, we could see higher levels, but for now, this range seems like a strong target.

3. Stop Loss.

To manage risk, set your stop loss below the buy zone at around $6.90. This will protect you in case the price goes lower and invalidates the bullish scenario.

Key Points to Watch.

Volume and Momentum. If the volume continues to increase, especially after the short liquidation, it could indicate that the price will continue to rise.

Market Sentiment. Keep an eye on broader market conditions. If Bitcoin ($BTC) is stable or rising, $DOT could follow suit.

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