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- Polkadot bulls could wait for a retracement or a breakout to take long positions
- The liquidation levels indicated significant levels at which a near-term reversal could occur
Dot [DOT] strengthened its presence in development activities by securing the second position in GitHub repositories. But despite this activity, the network saw a 9.8% turnover increase last month.
Read Polkadots [DOT] Price forecast 2023-24
AMBCrypto reported that Polkadot’s price action was turning bullish, anticipating a move towards $4. This movement went as expected. Moreover, DOT also went well beyond the psychological level of $4.
The power of Bitcoin meant that Polkadot traders had to prepare for many scenarios
Source: DOT/USDT on TradingView
The H4 chart showed a strongly bullish DOT structure. The Relative Strength Index (RSI) also reflected extremely high upward momentum. On-Balance Volume (OBV) burst past a local resistance and showed a large influx of buying pressure in recent days. The Chaikin Money Flow (CMF) signaled much the same with a value of +0.32.
Therefore, the indicators suggested that traders can expect more profits. But the picture was not yet complete. There was a range formation (orange) within which DOT had been trading since October 2. The high was at $4.29, and the mid-range was at $3.95.
Traders could go short with a tight stop-loss near the $4.25 level, but this was a risky trade. A more favorable entry could occur in the coming days, following a retracement towards the $4 level.
Liquidation levels indicated that long, over-indebted positions could be hunted
Source: Hyblok
The Cumulative Liq Levels Delta was solidly green amid the strong upward trend seen by the DOT in recent days. This also meant that a retracement to the south would hurt the late longs. There was a short liquidation of $3 million at $4.22-$4.24, close to the high range.
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A large number of short positions would also be liquidated on a decline to $4.03-$4.05. A move to either level would likely liquidate just over $3 million in short positions. Therefore, the $4 mark provided a juicy target for prices before another surge.
So, traders can wait for a dip to the $3.95-$4.03 region to reassess whether an opportunity to go long might arise. A drop below $3.95 would invalidate this idea.