Polkadot [DOT] consolidates near key support – is a reversal imminent?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- DOT’s price hovered around the key $5.2 support level.
- Buyers held a 50.3% advantage in the long/short ratio, as of press time.
Polkadot [DOT] hasn’t been left out of the recent market correction. Since 1 May, DOT has suffered losses of over 13%. This pushed it to the March low of $5.2.
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However, Bitcoin [BTC] climbing to $27k could spur some bullish momentum for DOT with bulls defending the $5.2 support level over the past seven days.
Bulls manage to hold onto the $5.2 support level
DOT’s market structure remained bearish on the daily and 12-hour timeframes. The sharp drop in mid-February saw DOT break through the $7 and $6 support levels. However, the $5.2 support level held steady and bulls rallied back to the $7 price zone.
The new resistance level at $7 halted the bullish rally along with the bearish order block under it. This pushed the altcoin back toward the $5.2 support level again. Although the support level remained steady at press time, sellers seem to be edging towards a break of the level. DOT posted three bearish candles in a row on the 12-hour timeframe to signal increased selling pressure.
With the On Balance Volume (OBV) recording a dip in volume and the Relative Strength Index (RSI) hovering around the oversold zone, it indicated eased buying pressure and more outflows. This signaled that near-term sellers had a slight advantage. A 12-hour candle close below the $5.2 support will see bears aim for the January low of $4.2.
On the flip side, if the $5.2 support level holds again, bulls will make another approach for the $6 resistance in the near term and $7 in the long term.
Fluctuating signals in the futures market
Liquidation data from Coinglass showed that longs bore the brunt of losses with huge spikes over a month-long period. A look at the 24-hour liquidation highlighted $198.61K worth of long positions stood wrecked as against just $1.58K shorts.
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However, the long/short ratio had buyers holding a slight advantage of 50.3% on the 12-hour timeframe. Further upside for BTC could influence a reversal opportunity for DOT.