Polkadot’s price has been experiencing a significant downturn, triggered by increased selling activity around the 200-day moving average. The cryptocurrency has touched the lower boundary of its sideways trading range, leading to concerns about the future market conditions and the forthcoming direction of its price.
Technical analysis suggests that the price may be on the verge of a breakdown. The daily chart shows a recent bullish ascent culminating at the critical 200-day moving average of $7.4, followed by notable rejection. The price has since declined, landing at a substantial support area represented by the lower threshold of its sideways trading range, positioned at $6.
The 4-hour chart shows fluctuations within an ascending wedge pattern, bounded by the $6 to $7.5 price range. The price has recently encountered resistance near a critical level, specifically the 0.5 Fibonacci level at $7.5, leading to a noticeable decline. This suggests the presence of heightened selling pressure around the crucial $7.5 resistance level, indicative of prevalent short positions in the market.
Sentiment analysis suggests that the market is leaning bearish, with expectations leaning towards continuing the downward trend. However, a bullish rebound could spark a substantial short-squeeze event, resulting in a rapid upsurge.
The heatmap provided by Binance shows levels where substantial liquidations might transpire. The probability of a cascading liquidation scenario heightens as the price approaches zones marked in yellow. Significant liquidity pools loom above the current market price, particularly near the $7.5 and $10 regions. This underscores the intensity of short positions in the perpetual market and identifies potential thresholds for their liquidation.
In conclusion, Polkadot’s price may be on the verge of a breakdown, with the potential for a cascading effect driving prices toward the $5.5 mark. However, a bullish rebound could spark a substantial short-squeeze event, resulting in a rapid upsurge.
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Source: CryptoPotato
