Polkadot [DOT] has been receiving considerable attention lately following its breakout from a long-established descending channel, signaling a notable shift in trend direction.
Currently, DOT is being traded at $7.55, showing a 21.94% increase in the last 24 hours. Its market capitalization has risen to $11.49 billion, while the trading volume over 24 hours has surged by 102.86% to reach $1.40 billion.
This breakout has placed DOT at a crucial juncture as it nears a significant resistance level at $7.71.
What does this breakout suggest for DOT’s future?
The breakout of Polkadot above its descending channel has instilled optimism regarding its upward momentum. DOT encounters immediate resistance at $7.71, a level that will determine the continuation of its current rally.
If it manages to surpass this resistance, the next target is set at $11.96, presenting a potential upside of 56.86%.
From a technical standpoint, the recent crossing of the moving averages has further strengthened the bullish sentiment. Additionally, the Relative Strength Index (RSI) stands at 76.8, indicating robust buying pressure.
Nevertheless, traders should keep a close watch on the RSI, as levels above 70 typically suggest that the asset is approaching overbought conditions, potentially resulting in short-term corrections.
Stability in social engagement and dominance
Despite the attention gained from the breakout, the social metrics of DOT have maintained a stable position. The Social Volume of Polkadot was at 174, with a Social Dominance of 0.52% at the current time.
These numbers indicate consistent engagement, showing ongoing community interest without any sudden surges.
Therefore, this steady engagement could contribute to gradual, natural price growth rather than brief periods of speculative trading activity.
Liquidation data driving the upward movement
The bullish movement of Polkadot has been significantly impacted by liquidation activities. In the last 24 hours, over $4.99 million worth of short positions have been liquidated, in contrast to just $334,600 in long positions.
This imbalance has led to a short squeeze, prompting bearish traders to close their positions, which in turn has amplified the price momentum of DOT.
As a result, additional upward pressure has been created, pushing Polkadot closer to its resistance level.
Could Polkadot reach $11.96?
The breakout of Polkadot, coupled with significant trading volume, a bullish technical setup, and steady social metrics, indicate a sustained upward trend. If DOT can convincingly break above $7.71, a move towards $11.96 seems highly probable.
Therefore, based on the current metrics, the rally of Polkadot appears to be well-supported and ready for further advancements in the foreseeable future.