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- The market structure remained bullish due to the overwhelming strength of buyers over the past five days
- A retest of the $6.3 level is likely if DOT closes a session below $6.8
Dot [DOT] has tilted strongly northwards so far in December. Despite falling from $7.68 over the weekend, the altcoin maintained its bullish market structure. Bitcoins [BTC] the latest dip also saw DOT decline significantly.
It is possible that a near-term resistance level just above $7 could turn away the bulls if the DOT bounces in the coming hours or days. What should traders pay attention to now?
A short-term move and subsequent retracement offered some clarity on the path forward
Source: DOT/USD, TradingView
From December 7 to December 9, DOT saw a rapid move north from $5.9 to $7.69. Shortly afterwards, the bulls were beaten back and prices temporarily fell to $6,285 a few hours before press time.
The explosive rally past $7 was used to chart a series of Fibonacci retracement levels (cyan). The 78.6% retracement level was at $6,284, where Polkadot prices retreated. Therefore, two scenarios are possible. The bullish is where DOT rises higher without falling below $6.8.
The somewhat bearish scenario, at least in the short term, would see another slow decline towards $6,285. After such a dip, the upward trend could resume. In both cases, to the north, the next bullish target is at $7.9 – a resistance level on a higher time frame. The USD 8.21 and USD 8.8 levels could also bother buyers.
Liquidation data shows a recovery above $7 is likely
Source: Hyblok
AMBCrypto analyzed Hyblock’s liquidation level data. Over the past few days, the Cumulative Liq Levels Delta has been steadily decreasing. On the last drop to $6.3, the price turned red, indicating that a rise could add to the pain in the futures market.
Read Polkadots [DOT] Price forecast 2023-24
On December 11, low leverage short positions were opened with an estimated liquidation level of $7.12. Combined with the negative Delta, there is a price increase to accumulate liquidity before a reversal is possible.