As of the latest update, Polkadot (DOT) is currently priced at $7.20, showing a 2% increase in value over the past 24 hours. Despite this, the trading volume for this altcoin has dropped by 9% to $290 million according to recent data.
Over the last week, Polkadot has seen a notable 16% surge in its value. However, recent indications on the one-day trading chart suggest the emergence of bearish signals, hinting at a potential need for a market correction.
Identifying a Head and Shoulders Pattern in Polkadot’s Performance
Ahead and shoulders pattern has been identified on Polkadot’s one-day trading chart, a common precursor to a significant downward trend.
Despite recent positive movements, DOT has struggled to surpass a key resistance level at the neckline, facing rejection multiple times. This trend signals a lack of buyer activity, paving the way for potential sellers to dominate and potentially lead to a sharp decline, targeting a price point of around $3.47.
The Chaikin Money Flow (CMF) indicator, pointing downwards, points towards higher selling pressure compared to buying pressure, indicating a bearish momentum that could drive DOT further down.
Moreover, diminishing histogram bars on the Bollinger Band Trend indicator signal a weakening bullish momentum, potentially setting the stage for a downtrend if buyers do not step back into the market.
Traders are likely monitoring a breakthrough above the resistance level at $7.56 as a signal to enter new positions, setting the stage for a potential rally towards the next resistance point at $9.20.
Stifled Growth Due to Falling Network Activity
The Polkadot network has experienced a decline in activity levels, which may impede potential gains. Data from TokenTerminal indicates that network metrics such as revenue and user numbers have hit multi-week lows.
Recent figures show a decrease in daily active users to 4,200, marking the lowest level in a month. Similarly, daily revenues have dropped to $1,118, reflecting a decrease in network usage.
Should network activity fail to pick up, it could further reinforce bearish trends, driving DOT prices downwards.
Revealing Insights from DOT’s Liquidation Heatmap
A detailed analysis of Polkadot’s liquidation heatmap highlights a lack of immediate liquidation levels in close proximity to the current price. This scenario may discourage traders from seeking liquidity, potentially leading to a consolidating price.
However, a critical liquidation zone is identified at $6.80, where a price drop to this level could trigger a series of long liquidations, exerting further downward pressure on the asset’s value.
Overall, factors like technical patterns, network activity, and market liquidity are poised to influence Polkadot’s future trajectory in the cryptocurrency market.