Polkadot on the verge of initiating another rally as…
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The OBV cast some doubts on the demand behind DOT.
- Polkadot prices trended higher in July and a breakout was likely approaching.
A recent report highlighted a slew of good news behind the bullish price movement of Polkadot [DOT] in the past three weeks. The price action has also been positive, with a bullish structure break on 21 June. A rally to the $5.6 and $5.75 resistance levels followed this event. This supply zone extends up to $5.8, but the buyers have been relentless in July.
Realistic or not, here’s DOT’s market cap in BTC’s terms
Before we examine the strength of the bulls, it must be remembered that Bitcoin [BTC] and Ethereum [ETH] saw relatively large corrections in the short term after attempting to climb higher last week. Hence, some lower timeframe selling pressure can arise in the coming days behind the largest crypto assets, which could translate into a negative reaction for DOT prices as well.
The bearish order block was not yet broken but the bulls have already made their intent clearOn the other hand, if BTC can stabilize or even climb back above $30.8k, it was likely Polkadot would follow. DOT has a bullish market structure and an uptrend on the daily chart. There was a bearish order block (red box) in the $5.3-$5.58 area, which a daily trading session has not yet breached.
The RSI showed bullish momentum but the OBV did not possess a strong trend in July. This hinted at a lack of buying volume, which could mean bullish exhaustion. Considering the importance of the $5.22 level since May, a drop below this support would be a sign of bearish pressure. Further losses in the form of a plunge below $5 would suggest bears are dominant. On the other hand, a breakout past $5.6 will likely see DOT climb to $6.2 and $7 over the next month or two.
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The slow rise in DOT’s Open Interest showed bullish conviction creeping back into the marketIn mid-June, the Open Interest was a faint shadow of what it had been in April when the OI began to trend downward. This was a sign of bearish sentiment but began to see a reversal as June progressed.
Since 6 July, the OI has begun to climb once more. It was not fervent, which suggested that capital flow into the DOT market is not as strong as it was in early April. If this begins to change and is accompanied by a move above the $5.6-$5.8 region, it would be a firm signal that bulls are driving a rally toward $7 once more.