Polkadot’s price falls past $7 – How does this affect DOT’s prediction?

Journalist

Posted: December 11, 2023

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Market structure remained bullish due to the overwhelming strength of buyers in the last five days
• A retest of the $6.3-level will be likely should DOT close a session below $6.8

Polkadot [DOT] has leaned strongly north in December so far. Despite the pullback from $7.68 over the weekend, the altcoin retained its bullish market structure. Bitcoin’s [BTC] latest dip saw DOT recede considerably too.

It is possible that a short-term resistance level just above $7 could rebuff bulls should DOT bounce in the coming hours or days. What should traders watch out for next?

Short-term move, subsequent retracement offered some clarity on the way forward

Source: DOT/USD, TradingView

From 7 December to 9 December, DOT saw a swift move north from $5.9 to $7.69. Soon after, the bulls were beaten back and prices momentarily dipped to $6.285 a few hours before press time.

The explosive rally past $7 was used to plot a set of Fibonacci retracement levels (cyan). The 78.6% retracement level was at $6.284, where Polkadot prices withdrew. Therefore, two scenarios are possible. The bullish one is where DOT surges higher without dropping below $6.8.

The slightly bearish scenario, at least in the short term, would be a slow drop towards $6.285 once more. Following such a dip, the uptrend could resume. In either case, to the north, the next bullish target is at $7.9 – A higher timeframe resistance level. The $8.21 and $8.8-levels could obstruct the buyers as well.

Liquidation data showed a bounce past $7 is likely

Source: Hyblock

AMBCrypto analyzed the liquidation level data from Hyblock. The last couple of days saw the Cumulative Liq Levels Delta drop steadily. The latest fall to $6.3 saw it go red, suggesting that a move upward could contribute to pain in the Futures market.

Read Polkadot’s [DOT] Price Prediction 2023-24

Low leverage short positions were opened on 11 December with $7.12 as the estimated liquidation level. Combined with the negative Delta, a bounce in prices to collect liquidity before a reversal is possible.