Polkadot can cross the $7 level if these conditions are met

Amidst Bitcoin’s soaring price action, Polkadot [DOT] embarked on a frenzied journey, oscillating within the narrow confines of $6.656 – $6.834 since the infamous 14th of April. Despite a slight dip in open interest, the funding rate remained resolutely positive, hinting at the potential for DOT’s bullish breakout to mirror that of BTC’s, and catapult it into a sustained recovery.

Is the uptrend sustainable?

Previously, DOT traded sideways between $5.77 – $6.66 before breaking out. But the breakout has constrained into a new upper range. At press time, the price action was above 50 EMA and 200 MA, reinforcing overall bullish sentiment both in the short and long term.

If bulls defend the resistance-cum-support level of $6.66, DOT may zoom to the $7 psychological level, especially if BTC reclaims the $31k. The next key resistance levels lay at $7.286, the bearish order block at $7.655, and the overhead resistance at $7.895.

A break below $5.77 will be a sign of weakness. However, sellers must clear the dynamic supports and hurdles at 50 EMA ($6.369) and 200 MA ($6.240) to gain leverage.

These levels can act as short-selling targets in such a downswing scenario. The previous channel’s lower boundary of $5.77 may slow any further drop.

Meanwhile, the stochastic RSI hit the overbought zone – a bullish moment and a ripe condition for price reversal. But, the Money Flow Index (MFI) fluctuated near the overbought zone – indicating an increased influx of money into DOT’s futures market.

Moreover, a rising ADX (Average Directional Index) insinuated that DOT’s uptrend continuation was highly likely.

Funding rates were positive despite a drop in open interest rates

According to Coinglass, DOT’s funding rates remained relatively positive throughout the first half of April – a bullish sentiment that means DOT enjoyed steady demand. This could tip bulls to push above $6.834, well only if BTC exceeds $30.4k and reclaims $31k.

However, the open interest (OI) rates declined slightly at press time. Although the drop could be attributed to the weekend, any further drop in OI from Monday (17 April) may tip the scale in favor of sellers.

“Based on the analysis of DOT/USDT on TradingView and the information from Coinglass, it appears that Polkadot (DOT) has experienced a bullish uptrend with potential for sustained recovery. The current price action is above the 50 EMA and 200 MA, indicating an overall bullish sentiment in both the short and long term. The funding rates remained positive throughout the first half of April, indicating steady demand, but open interest rates have slightly declined.” Melody Chan, Editor of Blockcast.cc commented.

She continued by saying that if bulls defend the resistance-cum-support level of $6.66, DOT may reach the $7 psychological level, with the next key resistance levels at $7.286, $7.655, and $7.895. However, a break below $5.77 may signal weakness, and sellers would need to clear the dynamic supports and hurdles at 50 EMA ($6.369) and 200 MA ($6.240) to gain leverage. The stochastic RSI hitting the overbought zone indicates a ripe condition for a price reversal, but the MFI near the overbought zone indicates an increased influx of money into DOT’s futures market. Additionally, the rising ADX insinuates that DOT’s uptrend continuation is highly likely.

Overall, while there are signs of bullish momentum for DOT, the sustainability of the uptrend remains uncertain and will depend on various factors, including the behavior of Bitcoin and the open interest rates. Traders should pay close attention to the key support and resistance levels to make informed trading decisions.