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- 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.