- DOT was trading at a key demand zone.
- The Open Interest chart showed strong bearish sentiment in the past few days.
Polkadot [DOT] experienced a 20.5% fall in prices in the last eight days. On the 11th of January, DOT rose to $8.58 but fell to $6.82 on the 19th. Despite this, buyers could still drive a recovery.
Technical analysis showed that the market structure of DOT on the one-day chart was bullish. Moreover, prices have receded to a demand zone. This presented traders with an opportunity to go long.
The bullish order block was not invalidated yet
AMBCrypto’s analysis of the one-day price action showed a bullish market structure break on the 11th. Even though this move was almost entirely retraced, a key support zone remained valid.
Demarcated by the cyan box, the bullish order block extended from $6.82 to $7.32. These levels were the extremes of the 7th of January’s trading. At press time, DOT was at $6.895.
A daily session close below the $6.82 level would mean the bears have the upper hand. In this scenario, a drop to $5.56 would become much more likely.
On the other hand, if the buyers can force a bounce from the demand zone, a move upward to $8.5 and $9.5 would become the more likely possibility.
The market sentiment favored the sellers
Data from Coinalyze noted that the Open Interest began to rise after 17th January. Since then, the price of DOT has fallen from $7.5 toward $6.9. The increase in OI alongside falling prices meant market participants were shorting the token.
Realistic or not, here’s DOT’s market cap in BTC terms
Additionally, the spot CVD has been in a downtrend since the 9th of January.
Previously, the end of December 2023 also saw increased selling pressure. The recent downtrend has not yet reversed and showed that, in the short-term, selling activity was dominant.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.