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- The market structure has remained strong due to overwhelming buying power over the past five days.
- If DOT closes the session below $6.8, it is likely to retest the $6.3 level.
Polkadot (DOT) has tilted strongly northward so far in December. Despite falling from $7.68 over the weekend, the altcoin maintained a bullish market structure. The recent decline in Bitcoin (BTC) has also set DOT back considerably.
A near-term resistance level just above $7 could reject the bulls if DOT rebounds in the coming hours or days. What should traders look out for next?
The short-term move, followed by a retracement, provided clarity on the way forward.
Source: DOT/USD, TradingView
From December 7 to December 9, DOT quickly rose from $5.9 to $7.69. Soon after, the bulls fought back and the price briefly fell to $6.285 a few hours before press time.
The explosive rally above $7 used to draw a series of Fibonacci retracement levels (turquoise). The 78.6% retracement level was $6.284 and the Polkadot price was withdrawn. So two scenarios are possible: What is optimistic is that DOT does not fall below $6.8 and rises higher.
A slightly bearish scenario would be a slow decline towards $6.285 once again, at least in the short term. After this decline, the upward trend may resume. In both cases, the next bullish target north is $7.9. This is a higher period resistance level. The $8.21 and $8.8 levels could also deter buyers.
According to liquidation data, a rebound above $7 is likely.
Source: Highblock
AMBCrypto analyzed Hyblock’s liquidation level data. Cumulative Liq level delta has been steadily decreasing over the past few days. It recently fell to $6.3 and went into the red, suggesting that the uptrend could cause pain in the futures market.
Read Polkadot (DOT) Price Prediction for 2023-24
The low leverage short position was opened on December 11 with an expected liquidation level of $7.12. Combined with negative delta, this allows for a price rally to gather liquidity before a reversal is possible.