Polkadot [DOT] has continued its persistent decline, solidifying its bearish stance after recently breaking out of a bearish pattern on the daily chart.
This development occurred as the price faced struggles in surpassing the 50-day Exponential Moving Average (EMA) in the previous rally attempts, which has been a crucial level of resistance.
As of the current moment, DOT is trading around $4.19, showing a decrease of close to 0.5% over the last 24 hours. The price movement suggests that DOT is under significant bearish pressure, with the 20-day EMA ($4.45), 50-day EMA ($4.91), and 200-day EMA ($6.11) posing as major resistance points.
DOT Bears Triggered a Patterned Breakdown
Analysis of the daily chart indicates that DOT recently broke out of a bearish flag pattern, indicating a continuing downward trend. The price movement has failed to reclaim the 20-day and 50-day EMAs, further confirming the prevailing bearish momentum in the current market situation.
The next crucial support level is around $3.8, where a potential reversal could unfold if the bears are unable to breach this level. Nonetheless, if this support level crumbles, DOT might be on track to revisit even lower values, possibly revisiting the $3.6 area.
Key levels of interest entail resistance at $4.45 (20-day EMA), $4.91 (50-day EMA), and $5.5. In terms of support, the significant levels to monitor are $3.79 and $3.5.
In the existing market setup, a drop below the $4.0 level might accelerate the bearish trend, pushing DOT closer to the $3.79 support level. On the contrary, reclaiming the 50-day EMA could hint at the commencement of a recovery phase, although this scenario seems less probable given the prevalent bearish sentiment.
If BTC’s sentiment becomes more positive, DOT could reattempt its 50 EMA after a potential 17% rise from its current levels.
The Moving Average Convergence Divergence (MACD) indicator is presently bearish, with the MACD line slightly dipping below the signal line. This indicates that the downward trend remains intact, with anticipated additional downward pressure unless a bullish crossover materializes.
Derivatives Data Offered Hope for Bulls
The long/short ratio in the derivatives market stands at 1.0239, suggesting a mild inclination towards bullish sentiment among traders. Notably, on Binance, the long/short ratio for DOT/USDT is notably high at 4.2854, indicating a substantial amount of long positions compared to shorts.
Nevertheless, overall market sentiment seems cautious, as the total open interest rose by 0.45% to $184.80M despite a 21.52% decline in volume.
Traders should monitor the MACD for any potential bullish crossovers and the broader market sentiment, particularly keeping an eye on Bitcoin’s price movements, as they could have an impact on the direction of DOT.