Despite recent challenges, which led to a decrease of 7.86% month-over-month, an examination of current data and technical indicators reveals a strong upward momentum that could soon drive Polkadot [DOT] to new heights.
Potential Upsurge in DOT Based on Technical Analysis
Technical analysis suggests a significant potential uptrend for DOT. Currently, Polkadot is within an ascending triangle pattern, a setup typically viewed as a signal for a substantial price increase.
Even though there was a recent rebound from the pattern’s resistance zone, resulting in a downward trend, this corrective phase is expected to continue until it reaches the next support level within the pattern at $4.277.
It is anticipated that at this point, there will be adequate buying pressure to break through the resistance barrier.
If this breakthrough materializes, the next target price for DOT stands at $5.1. Conversely, a shift in the opposite direction could see the price retreat to the lower end of the ascending triangle pattern.
Rising Retail Interest in DOT
There is a heightened interest among retail investors in DOT’s upward trajectory. Reports from Coinglass suggest a significantly positive sentiment weighted by open interest, reflecting a strong inclination towards buying.
The sentiment analysis considers market emotions by combining directional sentiment (bullish or bearish) with the open interest of options or futures contracts, primarily futures in the case of DOT.
This methodology places more emphasis on sentiments tied to larger financial commitments, which, in the case of DOT, lean heavily towards a bullish outlook.
Furthermore, there has been a substantial liquidation of short positions, with traders betting against DOT facing substantial losses, amounting to $64.88 thousand, as the price moved against their predictions.
DOT Positioned Well for a Potential Rally
The market strength for DOT remains solid, as indicated by the Relative Strength Index (RSI), which is trending upwards, forming higher highs—an indication of a strong bullish presence poised to drive up the price of DOT.
Despite the optimistic forecast, DOT might witness a short-term dip, possibly aligning with the $4.277 support level highlighted by technical analysis.
Following this temporary retreat, DOT is anticipated to kickstart a vigorous rally, with a potential target of $5.1 in the upcoming trading sessions.