Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- The rapid rise in DOT prices over the past week has emboldened the bulls.
- The bears can expect a rejection around the $5.11 level.
Bitcoin topped the $17k mark and most coins in the crypto market also saw relief rallies. Many assets saw their higher term market structure defeated and shifted to a bullish bias.
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Moles was one of these assets. He has posted significant gains despite the fearful sentiment of the past few weeks. The inefficiency on the charts has filled in, and a rejection at the key Fibonacci retracement level could see a reversal.
Polkadot Hits Psychologically Significant $5 Mark
The $5 mark is an important round number that the bulls will be eager to beat. Also, it had confluence with the 78.6% Fibonacci retracement level. This was based on the move down from $5.35 to $4.22 in December.
Last month’s sharp decline saw a fair value gap appear on the daily and 12-hour chart which extended from $4.7 to $4.99. This inefficiency has been filled at the time of writing this article. However, the market structure was bullish, having changed a few days earlier. Taken together, it could be the case that the price has spiked higher to collect liquidity just as BTC is at a resistance zone of $17.3k.
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To the north, a pool of liquidity ranged from $5 to $5.15. This region may see less selling pressure on the time frame. On the daily chart, the RSI showed strong bullish momentum with a reading of 61 and the OBV also posted gains.
However, a move above $5.11-$5.15 and a retest of this zone would offer bulls a higher chance of another move towards $5.35. This was because the $5 and $5.11 levels can act as persistent resistance levels.
Traders can wait for a decisive move above $5.11 before buying. Alternatively, they can wait for a move to the $5.11-$5.15 region and look for a drop below $5 before entering short positions. As it is, the market had yet to show its hand.
Spot CVD and Open Interest are experiencing a resurgence in recent days, but is it enough?
Over the last five days, open interest has been slowly gaining ground to show the flow of capital into the market. Meanwhile, the price has been in a strong uptrend. Therefore, the inference was bullish momentum. Spot CVD was also up by a small margin to show the buying pressure behind the currency.
A further rise in prices coupled with rising OI will signal strong bullish sentiment, and buyers may look for buying opportunities on a lower time frame. Meanwhile, a rejection at the $5.11 level and a session close below $5 thereafter could interest the bears.