Polkadot (DOT) has been facing consistent resistance at the $4.1 level, struggling to surge forward amidst uncertainty in the broader market. The recent decline from this resistance has exposed DOT to potential further losses as it hovers near critical support levels.
As of the latest update, DOT’s price was around $4.03, reflecting a 1.3% decrease over the past 24 hours.
Can DOT Supporters Defend Crucial Support Levels?
The recent battle at the $4.1 resistance level led to a setback for DOT as bulls were unable to breach the EMA resistance levels. Consequently, DOT is currently trading below the 20-day and 50-day EMAs, both acting as immediate obstacles. The short-term EMAs indicate a growing downward trend, signaling an increase in selling pressure for the coin.
A break below the $3.9 support level could potentially expose DOT to further declines, targeting a retest of the multi-year low range between $3.5 and $3.6. Breaching this critical level might pave the way for more extensive corrections.
Conversely, reclaiming the EMAs could halt a further decline and present a chance for a short-term resurgence. A potential retest of the $4.9 resistance level (above the 50-day EMA) could be on the horizon under this scenario.
Recent MACD readings exhibited a bearish crossover, with the MACD line dipping below the Signal line. This indicates that sellers hold the advantage at the time of reporting. Furthermore, the RSI corroborates this bearish sentiment. Investors are advised to wait for the RSI to close above the 50-mark before considering a long position.
Key Insights from Derivatives Data
The 24-hour long/short ratio currently sits at 0.8671, indicating a slight leaning towards short positions. However, on Binance and OKX, the long/short ratios heavily favor bulls, standing at 5.4599 and 3.6 respectively. This showcases significant optimism among leading traders on these platforms.
It is noteworthy that DOT’s trading volume surged by more than 31% in the past day. A modest increase in Open Interest (+0.46%) suggests that traders maintained their positions despite the recent market volatility.
Furthermore, data on liquidations disclosed a higher number of long liquidations, implying profit-taking and a cautious approach among traders, especially as DOT failed to sustain momentum above $4.1. Before contemplating any short-term positions, it is essential to monitor Bitcoin’s movements and evaluate the overall market sentiment.