DOT traders should consider reading this before making a move

DOT traders should consider reading this before making a move

 156 total views

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

  • Polkadot (DOT) has found new support at $5.0
  • Negative sentiment could undermine effective price recovery

After breaking past several supports, Polkadot (DOT) finally found a calm zone at $5.0. At press time, DOT was trading at $5.38, up 5% in the last 24 hours. The hike corresponded with BTC’s recovery of the $16k-level.

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

Despite the price recovery at press time, however, the market structure was still weak. Therefore, DOT could continue to fall to its new support at $4.4.

New support at $5; will it hold?

DOT traders should consider reading this before making a move

Source: DOT/USDT, TradingView

DOT registered an impressive rally between October and November, ending with an ATH of $7.42. However, bearish sentiment following the FTX implosion sent the asset crashing.

It found a support zone at $5.4, from which the bulls attempted two price recoveries. However, the two recovery attempts ended in a bearish order block around the 23.6% Fib level ($5.58). A price correction after the second recovery attempt fell below the previous support, turning DOT into a bearish market structure.

At press time, DOT was on the verge of a rally to break the $5.3-level. However, the current bearish market structure could push the price towards $5 or as low as $4.44 in the coming days or weeks. The Relative Strength Index (RSI) was at 38, showing that sellers have leverage.

On-balance volume has also hit a series of lows since mid-September. Ergo, both show that the market is still weak, favoring sellers.

However, the bearish bias will be invalidated if DOT breaks the 23.6% Fib retracement level ($5.58) on the intraday close. In this case, the new resistance target of DOT would be the bearish order block zone around the 38.2% Fib retracement level.

Negative sentiment and declining development activity

Source: Santiment

According to Santiment, DOT’s development activity bottomed out on 7 November before rebounding through mid-November. It declined steadily thereafter, with a steep downward trend at the time of writing. Interestingly, the price action followed development activity to a significant extent.

Moreover, the overall weighted sentiment was in negative territory at press time. Given the decline in trading volume as DOT’s price rises, the price-volume divergence may undermine strong buying pressure. This could point to a possible price decline or a deeper plunge.

If BTC holds $16,000 or breaks through $17,000, DOT could continue its ongoing rally. However, the price-volume divergence and negative sentiment could undermine any significant buying pressure that could turn the current market structure into an uptrend.

Long-term investors of DOT should therefore be cautious and monitor BTC, market sentiment, and development activity of the asset.

Adblock test (Why?)

Disclaimer: does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.