Cryptocurrency leader Bitcoin’s influence has caused other altcoin projects to experience notable increases. Polkadot, in particular, has seen a rise from its lower price range boundary of $6.4 to a significant resistance area at the upper limit.
Analyzing the daily chart, it is evident that Polkadot has been moving sideways, fluctuating between the notable support level of $6.4 and the critical resistance at $7.4. This has left the market uncertain about the future direction of Polkadot. Recently, Polkadot found support near the lower boundary of the range at $6.4, resulting in an upward trend. However, this momentum dwindled as it reached the upper limit of $7.4, coinciding with the 200-day moving average, leading to a minor rejection.
This indicates a balance between buyers and sellers, which could potentially result in continued consolidation until a breakout occurs. In the short term, a slight downward trend towards the critical $6.4 level is expected.
Analyzing the 4-hour timeframe, Polkadot’s price has been confined within a decisive range near the critical $6 level for support and around the $7.4 threshold for resistance, but there is no clear indication of its next move. After a period of increase, the price encountered the critical resistance zone defined by the 0.5 ($7.4) and 0.618 ($7.8) Fibonacci levels.
The current movement near this significant resistance suggests that sellers may dominate and there might not be enough upward momentum, potentially leading to another downward trend. Therefore, a price drop with the next target being the lower boundary of the range is expected.
In light of the recent price uncertainty surrounding Polkadot’s trajectory, it is crucial to analyze the sentiment in the futures market to predict its future expectations. The provided chart displays Polkadot’s daily timeframe price along with data on Open Interest and Funding Rates.
The chart shows a recent decline followed by horizontal consolidation, during which both Open Interest and funding rates experienced significant drops to their lowest values. A similar pattern was observed at the beginning of 2024, which eventually led to increased demand and the start of a strong upward trend.
Although both data points indicate notable declines, positions in the futures market appear ready for aggressive application, potentially resulting in significant movement. Consequently, if the current consolidation phase leads to intense demand and the implementation of long positions, the market may be poised to enter a significant upward trend targeting higher price levels.
It is important to note that the information provided in this article does not constitute investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
