Despite facing recent challenges and a decline of 7.86% month-over-month, a close examination of current data and technical patterns suggests strong momentum brewing that could soon push Polkadot [DOT] to new heights.
Potential Upward Movement According to Technical Analysis
Technical analysis points towards a potential significant uptrend for DOT. Currently, Polkadot is in the midst of an ascending triangle pattern, a formation typically seen as a precursor to a considerable surge.
Although there was a recent bounce off the resistance level within this pattern leading to a downward trend, this pullback is likely to continue until it reaches the next support level at $4.277.
Once at this point, there is an expectation of strong buying pressure that could break through the resistance barrier.
If this breakthrough materializes, the next price objective for DOT stands at $5.1. Conversely, a shift in the opposite direction could result in the price revisiting the lower end of the ascending triangle pattern.
Increasing Interest from Retail Investors in DOT
Retail investors are displaying a growing interest in the upward movement of DOT. Based on Coinglass data, the OI-weighted sentiment is notably positive, reflecting a high level of buying interest.
OI-weighted sentiment evaluates market sentiment by considering both the directional sentiment (bullish or bearish) and the open interest of options or futures contracts, with a focus on futures in the case of DOT.
This approach places greater emphasis on sentiments associated with larger financial investments, which, in the case of DOT, are predominantly bullish.
Furthermore, there has been a considerable closing of short positions, resulting in traders who were betting against DOT suffering significant losses totaling $64.88 thousand due to unfavorable price movements.
DOT Positioned Favorably for a Rally
The market’s strength for DOT appears robust, as evidenced by the upward trend of the Relative Strength Index (RSI), forming higher peaks—indicating a strong bullish sentiment poised to drive the price of DOT upwards.
Despite this optimistic projection, DOT could encounter a brief downturn in the near term, possibly aligning with the $4.277 support level identified through technical analysis.
Following this, DOT is anticipated to kick off a vigorous uptrend, aiming to achieve the significant target of $5.1 in the forthcoming trading sessions.