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Polkadot [DOT] yields some upside after a bearish run: Here’s what to look out for

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Image courtesy: Unsplash

DOT delivered a healthy 6.5% uptick on 1 May after concluding a bearish month in April, which ended with an extended downside. The uptick might be a sign that DOT is ready to deliver a healthy recovery rally. However, its current performance suggests that it is still being held back by the prevailing uncertainty.

DOT is currently at $15.23 and is down by 36% from its April high, which means it is trading at a healthy discount. This makes it a candidate for a healthy rally and from the looks of things, there has been significant accumulation after dipping to $14.18 which was its lowest point in April.

Source: TradingView

The Fibonacci retracement lines highlight price levels to watch out for during a healthy topside bounce back. They include $16.57 which sits on the 0.236 Fibonacci line, $17.9 which aligns with the 0.382 Fibonacci line, and $19.16 which aligns with the 0.5 Fibonacci line.

The expectations of a bounce-back are supported by the brief dip into the oversold zone according to the RSI. It is also backed by some accumulation at its recent low. The DMI highlights the current uncertainty as to whether DOT Sunday’s uptick was the start of a bullish wave or a pause in its bearish endeavor.

Source: TradingView

A foggy path ahead

DOT’s price direction uncertainty also extends to its on-chain metrics. The total supply held by whales metric is currently at its lowest point in the last four weeks. It has not yielded a slight uptick so far, suggesting that whales are not yet buying.

The Binance derivatives funding rate is also at its four-week low, and together these metrics point toward the lack of investor confidence in the market.

Source: Santiment

Conclusion

DOT’s ability to deliver a bullish rally in the next few days depends on the prevailing market condition. Unfortunately, fear and uncertainty are currently holding it back and this may increase the chances of some more downside. On the other hand, accumulation at lower price levels may limit the severity of any potential downside.

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Michael is a full-time journalist at AMBCrypto. He has 5 years of experience in finance and forex and more than two years as a writer in the crypto and blockchain segments. Michael's writing at AMBCrypto is primarily focused on cryptocurrency market news and technical analysis. His interests include motorcycles and exotic cars.

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