Polkadot faces resistance at $7.5, possible short-term consolidation

Polkadot has been struggling to reclaim the key $7.5 resistance zone and the 100-day moving average at $7.4, according to CryptoPotato data. While bullish momentum is currently strong, it appears to be insufficient, suggesting a possible short-term consolidation near this key level. Polkadot experienced a bullish surge following a resurgence in demand near the $6.5 support, taking it into the key resistance zone defined by the 100-day moving average and the $7.5 static level. However, current price action around the $7.5 mark suggests that the bullish momentum is waning. Buyers will face significant challenges in pushing the price above this resistance level, leading to the possibility of sideways trading or minor declines before the next decisive move. In this case, the $6.4 level will serve as the main support level in the medium term.

On the 4-hour chart, bullish momentum waned significantly upon reaching a significant resistance zone, with the price failing to break above the previous swing high. This key resistance area is capped by the 0.5 ($7.415) and 0.618 ($7.821) Fibonacci levels. However, the formation of a potential double top pattern near this resistance level suggests the possibility of short-term rejection. If buyers overcome the significant resistance at $7.8, the next target in the medium term will be the upper border of the wedge. Conversely, rejection at this level could lead to another downward move targeting the lower border of the wedge. A decisive breakout from this wedge pattern is necessary to determine the future direction of Polkadot.

Polkadot’s price showed signs of waning bullish momentum, failing to break above its previous high of $7.7. Analyzing futures market sentiment is critical to determining whether this upward trend will continue, as futures market activity can significantly affect price movements. Despite the recent bullish move, open interest and funding rates remain near their lowest levels without significant growth. This indicates a lack of strong bullish momentum and increases the likelihood of a consolidation correction. This suggests that market participants are not significantly increasing their long positions, indicating a lack of confidence in continuing the uptrend. Given dormant funding rates and lower open interest, the likelihood of a consolidation correction increases. This means Polkadot may enter a period of sideways movement or a small decline before settling on its next direction. However, if open interest and funding rates rise, this will signal renewed bullish momentum. A rise in these indicators suggests traders are gaining confidence and entering more aggressive long positions, potentially consolidating the uptrend.