Polkadot’s price fell below the important 200-day moving average and found support near $6.5. But if it drops below this level, it could lead to a significant decline in the near future.
The recent price action highlights uncertainty, with sellers dominating near the $6.5 support. If bears breach this level, a significant downtrend toward $5.5 is possible. Conversely, a bullish shift may target the 200-day ($7.1) and 100-day ($8.1) moving averages.
Polkadot’s Resistance and Downtrend Analysis
Analyzing the 4-hour timeframe, Polkadot’s recent uptrend faced significant selling pressure near the crucial resistance zone marked by the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels. This pressure led to a notable decline in price.
Source: TradingView
The downtrend suggests a prevailing bearish sentiment in the market, indicating a shift in momentum from the recent uptrend.
As a result of this downtrend, there’s potential for sustained downward movement towards the $6 support region. Price action in this area will likely serve as a primary reference point for predicting Polkadot’s future direction.
Analyzing Liquidity Levels for Polkadot’s Potential Reversal
Traders seeking insights into potential future price destinations amidst the recent downturn may turn to liquidity analysis in the perpetual market. By examining the liquidation heatmap for the Binance DOT/USDT pair, significant price levels with notable liquidity can be identified, offering valuable insights into potential price trends.
The recent significant decline in Polkadot’s price was largely driven by aggressive short positions. Notably, the price region above the $6.9 threshold is accompanied by substantial liquidity in the form of buy-stop orders, establishing it as a robust resistance area.
Source: Coinglass
Therefore, in the event of a bullish rebound fueled by renewed demand, Polkadot’s next likely destination would be the price zone above the $6.9 mark.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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