Polkadot stock recently saw increased buying activity near the crucial support area at $5.5, leading to a notable rally and breaking the lower end of the multi-month triangle that was previously broken. This price action indicates a false breakout and indicates a potential period of upward pullbacks.
Technical Analysis
by Cheyenne
Daily chart
A detailed analysis of Polkadot’s daily chart reveals a significant bullish recovery near the $5.5 support area. This area saw heavy buying activity, leading to a revival in demand and a significant price surge.
As a result, Polkadot broke the previously broken lower trend line of the multi-month triangle, indicating a false bearish breakout. This action indicates an increase in buying interest among market participants.
DOT is currently facing a crucial resistance zone at $6.3. If buyers break this threshold and maintain the upward momentum, the uptrend could continue towards the 100-day moving average at $7.2. Conversely, if the price is rejected at this resistance, Polkadot is likely to enter a consolidation phase within the $5.5-$6.3 range.
Four-hour chart
The 4-hour chart provides further insight into Polkadot’s price action. After breaking above the descending price channel, the price has registered a significant upside, indicating a revival in demand and buying pressure, possibly due to activity in the permanent markets.
The stock is now facing a critical resistance area, which includes the $6.3 resistance level and the previous major swing high at $6.428.
If Polkadot reclaims this resistance threshold, it could trigger a minor short squeeze and change the market sentiment, leading to a sustained uptrend towards the $7 resistance area. However, if the price faces rejection at this level, it is expected to go through a short-term consolidation phase within the $6.3-5.4 range. Therefore, Polkadot’s price movement in the coming days will be pivotal in determining its path.
Sentiment analysis
by Cheyenne
Polkadot has recently seen a surge in demand, leading to a significant rally towards its previous major swing high at $6.3. Understanding the supply dynamics at this critical level is essential for making informed trading decisions.
The accompanying chart shows potential liquidation zones within Polkadot price movements, providing crucial insights for medium-term strategies by smart money.
The chart reveals that the price has been targeting liquidity pools above its recent uptrend highs, reflecting strong bullish momentum and increased buying interest. It is worth noting that significant liquidity is concentrated above the critical $6.3 resistance level, which could be a short-term target for buyers aiming to retake this pivot and liquidate short positions.
Having this comfortable liquidity would enable buyers to maintain their upward momentum and push the price higher in the medium term. However, this level can also act as an important resistance point, and the upcoming price action in this area is likely to provide valuable insights into the future direction of Polkadot price.
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