Polkadot’s latest move raises these shorting Qs
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- DOT was bullish on a 4-hour timeframe.
- A bearish zone lines up with the range high.
Polkadot [DOT] has been in price consolidation for most of May, oscillating between $5.19 – $5.49. In the past few days, price action eased at the range low of $5.2, but rallied and closed above the mid-range of $5.3.
Read Polkadot’s [DOT] Price Prediction 2023-24
In the meantime, Bitcoin [BTC] reclaimed $27k; however, it is yet to be seen if it will maintain hold of this price zone. If BTC falters, especially at $27.8k, DOT could waver too and inflict a trend reversal at this bearish zone.
Will sellers gain leverage at range high?
DOT’s drop on 8 May left behind an FVG (fair value gap) zone of $5.47 – $5.61 (white). The above FVG zone lines up with 200-MA (Moving Average) and the range high of $5.5.
The confluence with FVG could make the area near the range high a strong bearish zone. A negative price reaction in this area could set DOT to a trend reversal, especially if BTC falters at $27.8k.
Such a move could offer a shorting opportunity, targeting the immediate mid-range level ($5.3) or the range low of $5.2.
Conversely, a session close above the FVG zone and $5.6 could offer bulls more leverage. A pullback retest and confirmed uptrend could see DOT rally to $5.9. The upswing could be accelerated if BTC reclaims the $28k zone.
Meanwhile, the RSI was above the neutral level, alongside a rising OBV, highlighting increased buying pressure and demand in the past few days.
Selling pressure abounds, but…
How much are 1,10,100 DOTs worth today?
According to Coinglass’s exchange long/short ratio, there were more short than long positions in the 4-hour timeframe. This denotes that sellers couldn’t be overruled; however, the spread was little, giving sellers only a little leverage.
But over $11k long positions have been wrecked in the past four hours, with only $251 short positions wrecked as of press time. This denotes a short-term bullish momentum that could set DOT to retest the range high before a likely reversal at the bearish zone around $5.6.