Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
Polkadot’s price was approaching a support zone that could present a buying opportunity. DOT is likely to perform well in the coming week, provided Bitcoin can move above $21.6k.
Dot [DOT] shot past the $5 resistance level last week when Bitcoin [BTC] broke above $17.6k. DOT remained bullish on the higher time frames. Both market structure and momentum favored buyers on the daily time frame.
Read Polka Dots [DOT] Price Forecast 2023-24
Polkadot saw some bullish enthusiasm evaporate over the past week following the $6 pullback. However, the $5.6 retest as support could have a significant bullish reaction in the coming days.
Polkadot sweeps liquidity above $6 before pulling back, but ripe for another upside move
The $5 level was a psychologically important area for traders, as a move above this level meant the bulls were in control. The liquidity area marked in red served as support in mid-December and later turned into resistance. An encouraging factor for bulls was the sharp move past the $5 resistance on January 11.
The following week saw DOT rise further to reach resistance at $6.06. A swing high at $6.52 was formed, likely indicating that early short positions were wiped out during the upward move to grab liquidity.
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On December 5, the price climbed to $5.68, after which selling pressure took over. Bears drove prices to a low of $4.2 in late December. Recent price action saw the same level retested as support. This meant there was a high chance of a wave to the north for Polkadot.
The RSI fell from overbought territory but continued to show bullish momentum. The OBV also took a hit, but most of January’s gains were intact.
Major liquidations last weekend indicated that liquidity grabs are a good idea
On January 14, Polkadot short positions of $5.1 million were liquidated. This was when the price rose to $6.52 before hitting a sell wall. However, significant numbers of long positions went unliquided in recent days, with $500,000 longs liquidated on January 18.
In recent days, the Open Interest has fallen along with the price, showing a bearish sentiment. The next rally will likely be accompanied by an increase in OI. The funding rate remained positive suggesting the possibility of more upside.
This post Polkadot is retesting a key support level should you buy the dip
was published first on https://ambcrypto.com/polkadot-retests-important-support-level-should-you-buy-the-dip/