Polkadot presents a possible range formation

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

• Polkadot has a bearish market structure in the short term.
• As things stand, a reversal was unlikely, but the price was in a more interesting time frame.

Dot [DOT] had a strong rally in June with prices moving from $4.2 to $5.5. The bulls tried to break this level, but were unable to finish a daily trading session above the USD 5.56 resistance level.

Read Polka Dots [DOT] Price Forecast 2023-24

In August, the price began to fall as sellers tightened their grip on the market. But things could change if DOT enters a demand zone. Can the bulls reverse the losses of the past month?

Polkadot was trading within a higher time frame area of ​​interest

Source: DOT/USDT on TradingView

DOT had a bullish order block on the 1-day chart in the $4.5 area. In the South, the USD 4.22 level was a significant level of support. It was a level that Polkadot recovered from in early January of this year. Therefore, this was an interesting area where a bullish reversal could occur.

The indicators did not support this idea at the time of writing. The OBV has been in a downtrend for the past week, showing high volumes of DOT sales. The RSI was also below the neutral 50 showing bearish momentum. In addition, the price and the RSI made a hidden bearish divergence.

This showed that further losses were likely. The H4 chart showed a recent lower high of $4.56. A move beyond this level would break the market structure and make it bullish. This would be the first step to recovery and can serve to alert traders to a possible long trade.

This idea would be invalidated if DOT fell below the near-term $4.4 support, as it would indicate that the bulls were weak.

Market sentiment remained bearish as selling pressure continued

Source: Coinalysis

The Open Interest chart shows that there has been no significant capital inflow over the past week. During this time, DOT did not see a significant trend emerge on the short-term charts. The conclusion was that speculators were not yet convinced that conditions were bullish.

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This finding was supported by the technical indicators and the price action. Spot CVD was also on a downward trend, highlighting Polkadot’s steady sales.

While this could change and an upside could occur, traders can wait for a bullish structure break before looking for opportunities.