- Polkadot price is currently facing resistance at $4.60, with bulls defending the key support level of $3.35 amid mixed market signals.
- While a short-term reversal is possible, a breakout above $4.60 could trigger a rally if buyers gain control and volatility spikes.
Polkadot’s [DOT] price has recently faced a turbulent period, with the cryptocurrency struggling to find upside momentum. As the bulls try to defend the $3.35 support, market participants are questioning whether DOT can rally and break above the critical $4.60 resistance level. While there are signs that a potential recovery is on the horizon, the path to a breakout remains unclear.
Polkadot: Can DOT Bounce from Oversold Conditions?
At press time, DOT was trading at $3.47, reflecting a 3.10% decline in the last 24 hours. Despite this dip, a key support level at $3.35 has held strong, and signs of an oversold condition are evident. The Relative Strength Index (RSI) recently dipped to 31.50, signaling that DOT may be primed for a short-term reversal.
Historically, $3.35 has been a solid demand zone for Polkadot, and bulls are attempting to capitalize on this support level. If this level holds, a recovery toward higher levels becomes a real possibility. However, a failure to sustain above $3.35 could trigger further downside, potentially opening the doors to a deeper correction.
What’s at Stake for Polkadot’s Rally?
Traders are closely monitoring the $4.60 resistance zone. A daily close above this level would confirm a bullish trend reversal and likely pave the way for further upward momentum. Should this occur, price targets of $5.00 and $5.38 could come into play. A potential W-shaped recovery pattern appears to be forming, further supporting the case for a breakout rally.
However, recent liquidation data shows a significant imbalance between long and short positions. Over $750K in long positions were liquidated, compared to only $32K in shorts, indicating that bullish traders were caught off guard by the recent dip. This surge in liquidations suggests weak buying strength and reinforces the bearish sentiment in the short term.
The Path to a Potential Breakout
Despite the short-term bearish sentiment, there are signals that volatility could spur a potential rally. The rise in Open Interest by 3.26% to $305.42M and sharply negative funding rates indicate growing interest in the market. These factors could trigger significant price moves, and if bulls can defend the $3.35 support convincingly, the door could open for a breakout above $4.60.
While the road ahead for DOT remains uncertain, the cryptocurrency has a legitimate opportunity to reclaim $4.60 if market conditions shift in favor of the bulls. Traders will need to watch for signs of sustained buying pressure and strong price action to confirm a reversal.
