Mapping Polkadot’s price – Navigating key resistance zones, risk of price reversal
DOT bulls should be looking to take profits and not add to their positions now.
- Polkadot may have potential for a bullish trend, but buying pressure has been weak
- Liquidation heatmap and Fibonacci levels seemed to be in agreement
Polkadot [DOT], at press time, exhibited bullish signs on the lower timeframe charts and seemed to be preparing to break past the $4.2-local resistance level. Bitcoin [BTC] was trading above the $92k-level as well, spurring bullish belief among altcoins.
An analysis last week revealed that the $3.8-level was a key level to flip to support. DOT‘s bulls have achieved this since then. Now though, they may have more ambitious plans.
Polkadot retains a bearish swing structure, but traders can be hopeful
The swing structure in question on the 1-day chart was captured by the Fibonacci retracement levels. The high at $4.76 must be beaten to shift the structure bullishly. Meanwhile, the $4.18 and $4.44 levels were the key nearby resistances.
The A/D indicator has been flat over the past month. The lack of uptrend meant buying pressure was weak, and was a hint that bulls might not be ready to drive an uptrend. At the time of writing, the Awesome Oscillator was still below the zero line – A sign that momentum was not bullish on this timeframe yet.
The DMI also reflected a lack of a clear trend, with both the -DI and +DI below 20. The price action and the technical indicators noted wariness from market participants over the past week.
Zooming in, the bullish momentum seemed to be clearer.
The price has set a series of higher highs and higher lows over the past two weeks, forming a bullish structure. The DMI also reflected a strong uptrend in progress, with the A/D’s uptick hinting at greater demand for Polkadot.
The liquidation heatmap also highlighted the risks of entering long positions now. The $4-$4.18 and the $4.3-$4.4 regions are both magnetic zones for the price. They could pull DOT higher, but they also pose the risk of a bearish reversal thereafter.
With the 1-day structure not yet bullish, traders in a long position can look to book profits at the $4.18 and $4.44 resistance levels. A surge beyond these two levels, and a retest of $4.44 or $4.76 as support, could be used to enter long positions for the next upward move.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
