Here are the critical levels to watch after the 8% weekly drop.

Polkadot’s price has faced significant selling pressure, leading to a notable drop below the crucial $6 support region. The price action suggests a possible continuation of the short-term downtrend, with no obvious signs of a recovery currently in place.

Technical Analysis

By Shayan

The daily chart

The daily chart shows a significant increase in selling momentum, which has pushed Polkadot’s price below the critical $6 support level and out of a multi-month triangle pattern. This breach has resulted in a substantial and lengthy liquidation event.

The price shows no signs of recovery in the daily time frame, indicating the possibility of a continued downtrend. However, a slight and temporary pullback to the broken $6 threshold could occur, confirming the breakout and solidifying the bearish scenario.

Key levels to watch:

Main target: Substantial support region at $5. Resistance: The significant resistance at $6.

Traders should exercise caution as the market may experience increased volatility and noticeable fluctuations in the short term.

Source: TradingView The 4-hour chart

On the 4-hour chart, Polkadot’s price action is showing a clear pattern of lower lows and lower highs, indicative of a sharp downtrend and ongoing seller dominance.

The cryptocurrency is recovering within a bearish price channel, underscoring continued selling interest among market participants. Despite the downtrend, the price has approached a crucial support area around $5.5, which is historically important as a support in several cases.

If selling pressure intensifies and the $5.5 support level is breached, Polkadot could see further downside, targeting the substantial $5 support zone.

Alternatively, a temporary consolidation scenario near this fundamental support is plausible, with limited price movements between the $5.5 support and the upper boundary of the descending channel.

Source: TradingView Sentiment Analysis

By Shayan

Polkadot has been in a strong downtrend for the past few weeks, finally falling below the critical $6 threshold. Understanding the key drivers of this bearish movement is essential for traders to gauge market sentiment and anticipate future price action.

The attached chart highlights the potential liquidation levels of Polkadot’s price action, which can provide valuable insight into areas of focus for the smart money in the medium term.

A significant amount of liquidity is above the $7.3 high, where the current impulsive downtrend began. This area is likely to be full of buy stop orders, indicating substantial selling activity and aggressive short positions.

These sets of liquidity above $7.3 indicate strong bearish sentiment in the market. Despite the ongoing downtrend, sellers will eventually have to take their profits. This often leads to periods of consolidation and possible bullish pullbacks.

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