Disclaimer: These findings are solely the author’s opinions and should not be regarded as investment advice.
- DOT was currently in a bearish market structure at press time
- DOT could experience a decline of up to $5.01
Polkadot [DOT] BTC lost support of $17.03K and the BTC price fell to $5.494 below its previous level. BTC failed to hold above $17K and DOT was also unable ($5.58) to keep above 23.60% Fib.
DOT traded at $5.43 as of press time. Technical indicators indicate a downward trend where DOT could locate a new support target at $5.01.
Read Polkadot’s [DOT] price prediction 2023-2024
DOT trades sideways in the 0% and 23.6% Fib levels
After forming a falling wedge structure between August and October, DOT experienced a bullish breakout early November with a high at $7.42. The market slump of early November in the US prevented an uptrend. This caused a correction in prices that reduced the gains from the previous rally.
DOT was facing significant resistance at $5.58 as of press time. This level was tested four times by the price without any convincing breakout. This created a sideways market structure which forced DOT to trade between $5.01-5.54 over the past few days.
Is DOT able to break out of the range within the next few days. The technical indicators show that it is unlikely. The Relative Strength Index, (RSI), has retreated from neutral-50 with a sharp downtrend at press time. This indicated that the market favors the sellers.
The On Balance Volume (OBV), which was also sideways, indicated that trading volume was still stagnant. It was possible, therefore, that DOT could trade sideways in the 0% or 23.6% Fib levels within the next days.
It was therefore more likely that DOT would drop to $5.01 before trying again to break through or retest the resistance. Therefore, traders may profit from buying on the downside and selling to the upside within the Fib pockets. An intraday close above $5.58 would invalidate the sideways market forecast.
Mixed metrics were recorded by the DOT
Santiment stated that DOT has been experiencing a negative sentiment ever since 30 November. The bearish sentiment was closely related to the DOT’s price performance.
However, Binance Exchange’s funding rates for DOT perpetual contracts were positive at the time of writing. This indicated that the outlook for DOT in the derivatives markets was positive. This could also indicate that the spot market bearish sentiment has not yet affected the derivatives market.
This suggests that DOT could trade in a sideways fashion while the price follows the above metrics. DOT could then fall to $5.01 support before rising again.
However, a bullish BTC could put DOT into an uptrend that could convincely break the resistance and invalidate our previous prediction.