Polkadot nears a bearish zone – Is a reversal likely?

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

• The H4 market structure was bearish at the time of writing.
• Buyers didn’t have an edge, despite improving Open Interest rates.

Polkadot [DOT] graced June lows following an extended bearish pressure on the third week of August (14 -20 August). Overall, 2023 DOT’s price performance has been dismal. Apart from January’s (+45%) and February’s (1.4%) gains, subsequent months have ended in red. 

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The press time level ($4.5) of Polkadot was close to June and January lows. As Bitcoin [BTC] struggled to keep hold of the $26k after shedding over $3000 between 14 – 17 August, DOT’s solid recovery could delay for a little while. 

Will sellers exploit the overhead bearish zone?

Source: DOT/USDT on TradingView

The H4 chart’s Relative Strength Index (RSI) retreated from the oversold zone, indicating an ongoing reversal. However, the On Balance Volume (OBV) exhibited fluctuations which could delay a solid recovery as demand wavered. 

DOT’s drop eased to a familiar support of $4.32 that rescued bulls in June. Like mid-June’s price action, DOT had to deal with a resistance level of $4.610. Besides, a bearish order block of $4.63 – $4.73 (red) exists on the 4-hour chart, slightly above the resistance level. 

So, the overhead area is a bearish zone that could set DOT into a reversal. If so, such a move could offer a shorting opportunity with entry at $4.63 and take-profit at the $4.32 support. 

Conversely, a candlestick session close above $4.73 on the 4-hour chart will invalidate the above short setup.  

Buyers weren’t in control

Source: Coinalyze

The CVD (Cumulative Volume Delta) tanked further from 17 August and has shown no signs of reversal at the time of writing. It shows sellers still had market influence over the same period. 

How much are 1,10,100 DOTs worth today? 

The Open Inerest interest fell from $144 million to around $132 million between 17 – 18 August. However, the OI recovered slightly, increasing to $138 million at the time of writing – Improved demand on the derivatives side. Yet, buyers weren’t close to market dominance. 

Traders should track BTC price movements for a better-optimized setup.