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Polkadot retests important support level, should you buy the dip

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Polkadot retests important support level, should you buy the dip
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Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • The price of Polkadot approached a support zone that could offer a buying opportunity.
  • DOT is likely to perform well over the next week, provided Bitcoin can push above $21.6k.

Polkadot [DOT] shot past the $5 resistance level last week when Bitcoin [BTC] broke above the $17.6k mark. DOT continued to have a bullish outlook on the higher timeframes. Both the market structure and the momentum favored the buyers on the daily timeframe.


Read Polkadot’s [DOT] Price Prediction 2023-24


Polkadot saw some bullish enthusiasm evaporate over the past week after the pullback from $6. However, the retest of $5.6 as support could have a significant bullish reaction in the days to come.

Polkadot sweeps liquidity above the $6 mark before pullback but is ripe for another move upward

Polkadot retests important support level, should you buy the dip

Source: DOT/USDT on TradingView

The $5 level was a psychological area of significance for traders, as a move above this level meant that the bulls were in control. The area of liquidity highlighted in red served as support in mid-December and was later flipped to resistance. An encouraging factor for bulls was the sharp move beyond the $5 resistance on 11 January.

The following week saw DOT climb further higher to reach resistance at $6.06. A swing high at $6.52 was formed, which likely indicated that early short positions were wiped out on the move upward to grab liquidity.


Is your portfolio green? Check the Polkadot Profit Calculator


On 5 December, the price climbed to $5.68, and thereafter, selling pressure took control. Bears drove the prices as low as $4.2 in late December. Recent price action saw the same level retested as support. This meant that there was a strong likelihood of a surge northward for Polkadot.

The RSI dropped from the overbought territory but continued to show bullish momentum. The OBV also took a hit, but most gains from January were intact.

Large liquidations last weekend indicated liquidity grab is a valid idea

Polkadot retests important support level, should you buy the dip

Source: Coinalyze

14 January saw the liquidation of $5.1 million Polkadot short positions. This was when the price climbed to $6.52 before it met a wall of selling. In recent days, however, significant numbers of long positions did not see liquidations, with 18 January seeing $500k longs liquidated.

In the past few days, the Open Interest has declined alongside the price which showed bearish sentiment. A rise in OI is likely to accompany the next rally. The funding rate remained positive, which suggested the possibility of more upside.

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Akashnath S is a Senior Journalist and Technical Analysis expert at AMBCrypto. He specializes in dissecting price action, identifying key market trends through advanced chart patterns, and forecasting both short-term and long-term asset trajectories. His distinct analytical method is grounded in his academic training as a Chemical Engineer. This background provides him with a systematic, process-oriented approach to market data, enabling him to analyze the complex dynamics of financial markets with precision and objectivity. Having actively covered the cryptocurrency space since the landmark 2017 market cycle, Akashnath possesses years of experience navigating both bull and bear markets. This seasoned perspective is critical to his insightful reporting on market volatility and evolution. As an active market participant, Akashnath enhances his analysis with crucial, hands-on experience. This practical application of his technical skills ensures his insights are not merely theoretical, but are also relevant and actionable for an audience looking to understand and navigate trading opportunities. He is dedicated to educating readers on the nuances of technical analysis, empowering them with the knowledge to make more informed financial decisions.
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