DOT witnesses strong gains but this is why bulls may lose steam at $4.2
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Polkadot has a bullish structure on the one-hour and four-hour chart, but this could soon change
- Data from MobChart suggested that short sellers could force a drop toward $4
Polkadot [DOT] saw a good performance on the price charts toward the end of the previous week. These gains continued over the weekend but the bears began to impose themselves on Monday, 2 October.
Realistic or not, here’s DOT’s market cap in BTC’s terms
Polkadot’s NFT ecosystem saw a decline in key metrics over the past week but this factor didn’t have a negative short-term impact on the token. However, developments over the past 24 hours saw bears succeed in taking the upper hand.
DOT saw a rejection at the $4.3 resistance
In the early hours of 2 October, Polkadot climbed to $4.31 but began to decline. Bitcoin’s [BTC] dip from $28.5k to $27.9k, as of press time, also played a part in swaying the DOT market sentiment.
The H4 market structure was bullish, and the Relative Strenth Index (RSI) was at 56, showing the uptrend was not lost yet. The On-Balance Volume (OBV) has also been on a steady ascent since 28 September. Taken together, the technical indicators signaled bullish strength.
Yet the $4.22-$4.32 zone was a stiff resistance zone. In early September it had served as support. The $4.3-$4.6 region was a bearish breaker block on the 12-hour chart that stretched back to mid-June. Hence, it was possible that DOT could face rejection at this HTF resistance.
Order flow analysis shows a dip could be imminent
Data from MobChart showed the emergence of a $44k limit sell order just a few hours before press time. This order sat at $4.35. Interestingly, at the time of writing a $50k limit buy order at $4.1 was removed. Together they showed that sell pressure would likely intensify and drag DOT toward $4, where close to $200k worth of buy orders were available.
How much are 1, 10, or 100 DOT worth today?
Traders can look to short DOT should the price bounce and reach the $4.22-$4.3 zone. Entering a short below $4.2 could be risky. To the south, the take-profit target can be $3.9, but it could be ambitious. A more grounded take-profit target would be the $3.95-$4 support zone. Meanwhile, the short idea would be invalidated should Polkadot climb above the $4.35 mark.