Analysis
Here’s why Polkadot investors should be cautious with current sideway structure
- Polkadot (DOT) could fall to $4.376.
- A rise above $4.695 will invalidate the forecast.
Polkadot (DOT) has been in a downtrend since mid-August. From its mid-August high of $9.6, it fell to $4.5, at the time of publication. That’s a drop in value of about 50%, and it looks like it could break through another support level.
DOT has been trading sideways for the past five days, fluctuating between $4.695 and $4.376, but it could fall below that range if support at $4.376 fails to hold.
Read Polkadot (DOT) price prediction 2023-24
Support at $4.486: Can it hold?
Source: DOT/USDT on TradingView
Polkadot’s downtrend since mid-August has formed a multi-month falling channel. It has broken through several support levels. Based on technical indicators, it could break through another one before the Christmas weekend.
In particular, the RSI recovered slightly from the oversold area but moved sideways. It suggests that buying pressure increased, but sellers offered as much resistance, resulting in a neutral market. Nevertheless, the RSI was at 32, deep in the lower range, indicating that sellers still have the upper hand.
The on-balance volume (OBV) has also steadily declined since November. Therefore, DOT could continue to trade within the current sideways structure or fall below it. If sellers have the upper hand, the price could break the current support at $4.486 and reach $4.376.
Such a downward move could help investors sell high and buy back cheaply when DOT reaches $4.376. However, this opportunity comes with an unattractive risk-reward (RR) ratio.
How many Polkadot (DOT) can you get for $1?
A break above the upper boundary of the trading range at $4.695 would invalidate the above bearish bias. However, DOT bulls will need to overcome the immediate bearish order block at $4.602 to move above the upper range boundary.
The upside move will allow DOT to focus on the EMA Ribbon level at $4.923.
Investors’ outlook remained bearish despite the recent increase in development activity
The DOT’s weighted sentiment remained negative for most of December. At the time of publication, it slipped even deeper into the negative territory. This suggests that investors remained extremely pessimistic about the asset.
Interestingly, the steady increase in development activity only drove the DOT price higher around 13-15 December, when sentiment improved slightly. Could the recent negative sentiment increase and development activity increase negate the positive outlook for DOT’s price?
