- Polkadot has faced strong resistance at $4.27, but the RSI shows a breakout is now possible.
- The price has also touched the 50-day SMA, indicating that the short-term trend is flipping bullish.
As an analyst with a decade of experience under my belt, I must say that Polkadot [DOT] is presenting an interesting scenario at the moment. While it has faced some strong resistance at $4.27, there are several indicators suggesting that a breakout could be on the horizon.
At the moment of writing, I find myself analyzing Polkadot [DOT] trading at approximately $4.25, marking a nearly 2% increase over the past 24 hours. However, my observations indicate that this altcoin has encountered significant resistance above its current value. Each attempt to break through has been thwarted due to an apparent absence of strong buyer support.
On the other hand, there’s a growing enthusiasm for Polkadot, as indicated by the significant surge in its trading volumes. In fact, according to CoinMarketCap, over the past 24 hours, the volume of DOT trades has increased by more than 20%.
Besides these rising volumes, several indicators suggest that the trend could be reversing.
Key reasons why DOT can overcome resistance
Preparations indicate that bulls could boost Polkadot (DOT) in surpassing the resistance at around $4.27. For approximately two weeks, this price point has proven to be quite formidable as it has demonstrated little enthusiasm from buyers.
The Relative Strength Index (RSI), a tool used to measure the speed and change of price movements in an asset, suggests a shift in the market’s momentum. Specifically, when the RSI reads 50, it signifies that the overall market sentiment has transitioned from bearish (negative) to neutral, indicating neither bullish nor bearish sentiment dominates at this point.
The rising RSI also crossed above the signal line, suggesting that a bullish trend is underway.
The stock DOT has reached its 50-day Moving Average (MA) at $4.28. If the price moves upward beyond this point, it could shift the short-term outlook to optimistic, with the potential for further growth to challenge the next resistance at $4.64.
Analyzing derivatives data
According to information from Coinglass, it appears that derivative traders are actively establishing and holding onto their positions in the DOT market. The trading volume has significantly increased by over 60%, while the Open Interest has risen approximately 2% to reach about $223 million.
In simpler terms, the balance between buyers (long traders) and sellers (short traders) in the market was nearly equal, with the Long/Short Ratio being 0.97, suggesting neither group holds a significant advantage over the other.
On Binance, it appears that the number of long traders outweighs the number of short traders quite noticeably, as indicated by a Long/Short Ratio of approximately 4.37.
Polkadot network activity
One potential reason why Polkadot may not be breaking through its resistance could be a decrease in network usage or activity.
Based on Token Terminal’s reports, there appears to be a significant decrease in the number of daily active users, suggesting less engagement.
For the past few days this month, we’ve seen a decrease in the number of active addresses from approximately 5,200 to roughly 3,600. At the same time, the daily transaction count hasn’t shown any significant fluctuations or notable changes.
Read Polkadot’s [DOT] Price Prediction 2024–2025
Reduced use of the network typically means less need for the token. This situation also hints at decreasing trust in Polkadot, which in turn negatively impacts market sentiment.
According to Market Prophit’s data, there has been a predominantly negative attitude towards Polkadot in the last month. If this trend persists, it’s expected that DOT may struggle to perform well.
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2024-10-14 21:44