Over the previous month, Polkadot [DOT] has been experiencing a robust uptrend in its price. It achieved a peak at $11.65 on December 4th, although the bulls have not been able to establish the $10.5 range as a solid support level as of yet.
The long-term forecast for Polkadot remains optimistic, but the market requires a period of consolidation and recovery.
Downturn Expected in the Short-Term Prediction for Polkadot
On the daily chart, Polkadot has consistently displayed a strong bullish trend. Buying activity has surged significantly over the past month, as evidenced by the OBV hitting a new peak. This peak surpassed the previous one formed in March when DOT was trading at $11.8.
Although the sustained buying interest is a positive sign, a bearish divergence on the RSI has been observed. The RSI has been forming lower highs in the last couple of weeks while the price of Polkadot has been climbing higher.
Consequently, the short-term outlook for Polkadot leans towards a bearish bias. The market needs time to recalibrate and consolidate, which could take anywhere from a week to a month, depending on broader market sentiments and the momentum of Bitcoin [BTC].
While this consolidation phase is likely to result in the formation of a short-term trading range, the overall upward trend on higher timeframes remains intact. A drop below $8.56 and $7.55 would be required to shift the long-term bias towards the bearish side, which seems improbable given the current data.
If the $10.5 level transitions into a support zone, DOT bulls are expected to target resistance levels at $16.35 and $23.85 in the upcoming weeks.
Identifying the Next Potential Buying Opportunities
Significant liquidation levels have accumulated around the key support levels of $7.4 and $8.4 over the past ten days, highlighting their importance and corroborating the findings on the daily chart.
The recent liquidation heatmap has pointed out the $9.9 and $11.3 regions as immediate attraction points. It is conceivable that DOT might gravitate towards these levels and establish a trading range in the process.
Traders should, however, be prepared for a potential descent towards $8.4 or lower levels.
Disclaimer: The opinions expressed in this content do not constitute financial, investment, trading, or any other form of advice; they solely represent the viewpoint of the author.