Polkadot Faces Mixed Signals: Is a Rebound Toward $4.60 Possible Amid Selling Pressure?

• Polkadot (DOT) demonstrates conflicting signs as bulls aim for $4.60, while bearish sentiment continues to dominate the market.

• Despite recent price fluctuations, indicators point towards potential recovery as critical supports hold firm.

• “As long as liquidations remain skewed, it’s apparent that momentum has yet to fully shift in favor of the bulls,” noted a market analyst.

Polkadot faces mixed market signals; bulls target $4.60, while bearish pressures and liquidations complicate the outlook. Will support hold?

Positive Signals Amidst Bearish Pressure: Can DOT Rebound?

Polkadot’s recent price movements are closely being analyzed as it bounces off the $3.35 support level, a key area right under historical demand zones. The relative strength index (RSI) currently reads 31.50, indicating that DOT has reached oversold conditions. This scenario raises the likelihood of a short-term reversal if buyers can sustain this critical support level.

Failure to maintain trading above $3.35 could lead to further market declines. For traders, the $4.61 resistance level is increasingly significant; a sustained close above this mark may signal a bullish trend reversal, potentially driving DOT towards higher targets of $5.00 and $5.38. Observers note the formation of a potential W-shaped recovery pattern that could materialize should buying interest strengthen.

Source: TradingView

The Impact of Liquidations on Market Sentiment

Recent liquidation data indicates a significant imbalance, with long positions suffering a considerable setback of approximately $754.48K, compared to only $32.84K in shorts. This negative disparity reveals that many bullish traders were over-leveraged and caught off guard by recent downturns.

Such extensive liquidations amplify existing bearish pressures, demonstrating the lack of strength among buyers during this price decline. Most liquidated positions were identified on major exchanges like Bybit, Binance, and OKX, platforms known for high retail participation, suggesting that retail optimism has been swiftly diminished.

Source: Coinglass

Market Indicators Signal Potential for Recovery

Binance’s funding rates have experienced a notable drop to -0.007954% as of April 9th, suggesting that the short side dominates market activity. However, it is essential to recognize that extreme bearish sentiment can often act as a contrarian signal. A subsequent price rally may incite short sellers to exit their positions quickly, potentially triggering a short squeeze.

Source: Santiment

Moreover, DOT’s Open Interest has surged by 3.26%, now standing at $305.42M. This rise signals increasing market engagement, often indicative of impending price shifts. The combination of growing Open Interest alongside negative funding could strengthen the market’s setup for volatility.

Future Outlook: Can Polkadot Surpass $4.60?

Polkadot holds a critical opportunity to reclaim $4.60, although the market’s trajectory remains uncertain. The recent sharp increase in long liquidations points towards weak buying control and ongoing sell pressure. Present price trends suggest hesitance among buyers, failing to decisively break through key resistance levels, while market sentiment remains cautious with sellers maintaining short-term dominance.

Nevertheless, the rising Open Interest paired with persistently negative funding rates presents a recipe for potential volatility. If the bulls manage to convincingly defend the $3.35 support, a breakout above $4.60 could soon be a viable target for short-term traders and investors.

Conclusion

In summary, Polkadot’s current phase is a battleground where significant indicators suggest a possible turnaround, provided buyers can step up. As traders keep a close eye on support levels and resistance, the coming days will be crucial in determining if DOT can sustainably ascend on its price journey.