- Polkadot faces strong resistance at $4.27, but RSI shows that a breakout is now possible.
- The price also touched the 50-day SMA, indicating that the short-term trend is bullish.
Polkadot (DOT) It was trading at $4.25 at press time after rising nearly 2% in 24 hours. The altcoin is facing strong resistance above its current price, and all breakout attempts have failed due to lack of buyer support.
But now interest in Polkadot is growing. CoinMarketCap In the last 24 hours, DOT’s trading volume has seen an increase of over 20%.
In addition to this increasing volume, several indicators suggest that the trend may be reversing.
Key Reasons DOT Can Overcome Resistance
Bulls are gearing up to support a breakout of DOT above the $4.27 resistance level. This price acted as strong resistance for nearly two weeks, showing a lack of interest from buyers.
The Relative Strength Index (RSI) shows that momentum is changing. The RSI is 50, indicating that market sentiment has shifted from negative to neutral.
The rise in RSI also crossed the signal line, suggesting that an upward trend is underway.
Source: TradingView
DOT also hit its 50-day simple moving average (SMA) at $4.28. If the price moves above this level, the short-term sentiment will turn bullish and the price will be ready to bounce to test the next resistance at $4.64.
Derivatives data analysis
Data from Coinglass shows that derivatives traders are opening and maintaining positions in DOT. Trading volume soared more than 60% and open interest rose about 2% to $223 million.
Source: Coinglass
The long/short ratio is at a neutral level of 0.97, indicating that the market is not heavily biased towards either long or short traders.
However, on Binance, there appear to be far more long traders than short traders, with a long/short ratio of 4.37.
Polkadot network activity
One of the factors that could prevent Polkadot from breaking through resistance is reduced network activity.
According to Token Terminal, usage is declining with a noticeable decrease in the number of daily active addresses.
Since the beginning of the month, daily active addresses have dropped from 5,200 to about 3,600. On the other hand, the number of daily transactions remains relatively stable with no significant changes.
Source: Token Terminal
Read Polkadot (DOT) price prediction for 2024-2025
As network usage decreases, token demand tends to decrease. This also points to a decline in confidence in Polkadot, which further weakens market sentiment.
Source of data market prophet This shows that sentiment towards Polkadot has been predominantly negative over the past month. If this sentiment does not change, DOT will likely continue to face poor performance.