Can Polkadot overcome the $5.8 resistance?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The lower timeframe price action of Polkadot had a bullish bias.
- The strong resistance levels overhead meant a decisive breakthrough might take a while to materialize.
Global investors are awaiting the next release of the US CPI data on 12 July. This meant that crypto asset prices could see heightened volatility in the short term as investors and traders race to digest and price the data. Similarly, Polkadot [DOT] approached a critical resistance level in recent hours.
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Polkadot saw many positive developments in Q2 2023. However, despite the rally in June, the higher timeframe market structure was not yet bullish. What can traders and investors watch out for in the coming days?
A large resistance zone lies overheadThe 4-hour chart showed the price action of DOT was bullish in the past two weeks. The CMF was well above +0.05 to highlight strong capital inflow to the Polkadot market. The RSI also flipped neutral 50 to support on 11 July and continued to push higher. This was a sign of bullish momentum.
Another sign of bullish momentum can be seen on the price action itself. After dropping to the $5 level on 7 July, DOT consolidated there till 10 July before climbing back to the short-term resistance at $5.22.
At the time of writing, Polkadot was trading just above that level, which underlined bullish intent. Yet, the entire region from $5.2-$5.8 is lined with bearish fortifications. The price action from 8 May showed that this region was defended by the bulls for almost a month before the bears finally won the battle.
Hence, on the way upward, the $5.22, $5.45 and $5.56 levels will likely offer significant resistance. The $5.74-$5.81 zone was also a resistance from late April. The bulls will have a lot of heavy lifting to do to push prices past the sellers.
The positively sloped spot CVD will be encouraging for DOT buyersThe 1-hour chart from Coinalyze showed that the Open interest was slowly rising since 7 July. It did see large retracements, though, like the one on 10 July.
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The inference was that speculators did not collectively possess bullish enthusiasm, but as the OI limped higher, there was a steady capital flow inward.
The spot CVD has also risen since 10 July. If the buyers can sustain the demand, it is possible that DOT can climb above the resistance levels above it. Yet, it is more likely that the bullish advance in the coming days will be a slow war of attrition than a blitzkrieg.