Polkadot (DOT), the popular blockchain interoperability protocol, has been experiencing a period of price volatility. While recent analysis suggests a potential short-term bottom, the cryptocurrency’s trajectory remains uncertain.
A Bullish Structure, But Bearish Momentum
Despite a bullish market structure break in late August, Polkadot’s price has retraced significantly, currently hovering just above the crucial support level of $4.22. While this level has proven resilient in the past, the bearish shift in momentum as indicated by technical indicators raises concerns.
The $4.22 Challenge
The $4 region holds psychological significance for Polkadot, and a break below this level could trigger a deeper price decline. However, a bounce from the $4.22 support could lead to a range formation and a potential recovery towards the local highs at $5.
Technical Indicators Suggest Caution
While the overall market structure on the daily chart remains bullish, the 12-hour timeframe reveals bearish signals. The MACD’s bearish crossover and the rejection of the OBV near recent highs indicate a potential shift in momentum.
Liquidation Levels and Buying Opportunities
According to AMBCrypto’s analysis of the liquidation heatmap, a dense cluster of liquidation levels around $4.11 could attract prices before a potential reversal. Swing traders might consider buying opportunities at this level, targeting a recovery to $5.17.
Conclusion
Polkadot’s price prediction for the short term is uncertain. While a temporary dip is possible, the cryptocurrency’s fundamental strength and the potential for a bounce from the $4.22 support level offer hope for a recovery. However, traders should exercise caution and closely monitor technical indicators for signs of a more significant trend change.
