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The mainnet asset DOT of the popular altcoin project Polkadot recently failed to surpass its 200-day moving average, triggering a notable decline in the altcoin. With the decline, DOT’s price approached the lower boundary of the trading range around $6. This pullback from near the upper boundary of the range has significant implications for the altcoin’s next move and is crucial for predicting its current price trajectory.
Polkadot (DOT) Price Analysis
On the daily chart, DOT has been consolidating between the key resistance at $7.5 and the critical support level at $6 for some time. The recent pullback from the upper boundary of this range will indicate potential downward momentum if sellers manage to pull the price below the critical support level. Conversely, an upward recovery towards the upper boundary of the range with increasing demand could pave the way for a strong bullish trend.
A closer look at the 4-hour time frame price chart shows that DOT pulled back from the significant resistance around $7.4, resulting in a sharp decline towards the lower boundary of the rising wedge formation.
The altcoin is currently on the verge of falling below this critical demand zone, indicating potential new downward momentum. However, it leaves room for demand to increase around this key level, potentially expecting a rise towards the upper trend line of the formation.
Futures Market Open to Aggressive Positioning
Looking at the sentiment in the futures market, more information can be gathered about Polkadot’s future potential. The significant decrease in both open interest (OI) and funding rates during the horizontal consolidation period indicates that the futures market may be at a suitable point for aggressive positioning.
If the consolidation phase leads to an increase in demand and long positions, this could indicate the beginning of a bullish trend. Conversely, if short positions return to previous levels, a gradual decline can be expected.
Overall, the pullback of DOT from $7.4 marks a critical point for the altcoin. Currently, investors are closely monitoring the sentiment in the futures market, as well as the key support and resistance levels, to gauge the potential direction of the next significant move in the altcoin’s price.
