DOT stuck at $5 psychological level — can the bulls rally?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Selling pressure eased off at the key $5 psychological level.
• Shorts still maintained the upper hand in the futures market.

The descent of Polkadot [DOT] beneath the $5.23 support level ended the week-long ranging formation on the 12-hour price chart. However, the selling pressure slowed down, leaving the price to stabilize at the $5 psychological level and offering bulls a good chance to rebound.

Read Polkadot’s [DOT] Price Prediction 2023-24

A successful bullish attempt would be dependent on Bitcoin [BTC] reclaiming the $29.5k price level with the king coin flashing bullish signals, as of press time.

As selling pressure eases, is DOT primed for a rebound?

Source: DOT/USDT on Trading View

While DOT’s price dwindled, Polkadot shone on the social front. This was highlighted by a metrics report on the network’s surging social engagements. As its social sentiment continues to rise, this could have an effect on DOT’s price.

After sellers flipped the $5.23 price level on 1 August, buyers quickly made an attempt to recover. However, the price was rejected at the new resistance level. Thus, leading to a 5% price drop over the past 48 hours.

Conversely, the stagnation of the bearish momentum at the $5 price zone offers bulls an opportunity to reverse the bearish trend.

The Relative Strength Index (RSI) pushed up slightly to 39 with the uptick a sign of reviving confidence. The Chaikin Money Flow (CMF) also moved above the zero mark with a reading of +0.06 to signal incoming capital inflows.

A bullish reversal from the current levels will need to close above the $5.23 price level for sustained gains. Another price rejection at that level may see DOT experience extended losses pushing it toward the $4.4 – $4.6 price zone.

Muted reaction in the futures market

Source: Coinglass

How much are 1,10,100 DOTs worth today?

Despite DOT presenting an opportunity for a bullish rebound, there was little to no reaction in the futures market. Shorts continued to hold sway on the exchange long/short ratio with a 52.1% share of the open contracts.

Ergo, traders should exercise caution in opening new positions to avoid being caught by a bullish rebound or an extension of the current price dip.