Trading DOT: The battle at $4.53 and what lies ahead
If you’ve ever seen a relay race, you know that the success of the last leg of the race often depends on the performance of the previous runners. Polkadot (DOT) finds itself in a similar situation—a promising setup with the potential for significant gains, but its fate is closely tied to the performance of Bitcoin.
TLDR
- The breakout from the main downtrend line and local support at $4.22 to $4.33 are positive signs.
- DOT faces resistance at $4.53 but could see bullish action if BTC holds or breaks its bullish pennant.
- RSI is in a healthy range, not overbought, but a bearish divergence influenced initial rejection at $4.53.
- A positive funding rate and decreasing open interest create a relatively healthy market backdrop.
- DOT's potential upside depends on BTC's performance and the outcome of its bullish pennant.
Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.
Technical analysis
DOT is still in a nice structure. We have the breakout from the main downtrend line (red line) while also using the $4.22 to $4.33 area as local support.Currently, DOT is struggling to get above the horizontal resistance of $4.53. However, we expect DOT to move higher and break above this $4.53 horizontal resistance area. This is possible as long as BTC can hold its current price or even break its bullish pennant to the upside. If this happened, we would expect some very bullish price action for DOT.
DOT 1D
RSI and funding rates
The RSI is at a healthy level of 59 on the daily timeframe, so it is very middle territory and nowhere near being overbought. We did, however, get a bearish divergence on the daily timeframe, which is potentially the reason why DOT was initially rejected from the $4.53 level.DOT’s funding rate remains very positive, and its open interest has come down meaningfully in the past few days. This is a relatively healthy setup in terms of a market mechanics perspective.
Cryptonary’s take
If BTC can hold up or even push higher, we think DOT could see some considerable upside in the short term. Price is currently just 20% above its macro bottom (it’s current macro bottom), and therefore, this has underperformed against other assets.Action
- A bullish technical structure could give DOT some more meaningful upside in the near term. However, this does depend on BTC holding up in its pennant and potentially breaking higher.
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