While Polkadot [DOT] ended July strongly, the start of August was on the opposite side. On the last day of the previous month, DOT increased from $8.2 and went as high as $9.11—driving good profits for its short-term investors.
However, DOT has reversed to a downward trajectory since 1 August and has lost around 9.64% of its previous day’s value. At press time, DOT’s price was $7.83 as per CoinMarketCap.
Long way ahead?
From the charts, DOT had been holding on to its $8 support after losing it at $8.63 and $8.15. The coin, however, lost its grip on the zone after the selling pressure overwhelmed it.
The loss of this support could end the hopes of DOT traders who aimed to go long.
Well, that may also not be the case, as DOT did not entirely fall off after losing a vital support zone in July.
The bearish state of DOT was further confirmed as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) revealed their respective positions.
According to the chart, the RSI was already heading towards the oversold level. However, it had maintained a good level in favor of DOT sellers.
At press time, it had gone lower than the midpoint at 41.95. Similarly, the MACD established the bearish DOT sentiment as the sellers’ strength indicator (orange) rose above the buyers’ (blue).
While some traders might have hoped for bullish signals, DOT had other plans. This was because the selling pressure kept increasing as DOT indicated more flatter lows and lower highs. In the chart, the descending triangle may prove that DOT’s current bearish momentum is incredibly high.
Based on Santiment data, the status of DOT may continue to be in favor of shorts. Trading volume had reduced 35.94% over the last 24 hours. As of 1 August, it was $1.01 billion. At the time of this writing, it had gone down to $666.85 million.
Similarly, a dwindling market cap does not represent traders’ hopes to go long. Notably, the market cap decreased from $8.91 billion to $81.2 billion.
However, it might be too early for shorts to rejoice over control. This is because the Exponential Moving Average (EMA) did not follow the projections of the MACD and RSI. The 20 EMA (blue) was solidly above the 50 EMA (yellow), indicating that the continuous price fall may not last long.
The next 24 hours could be critical for DOT. It may be the wrong time to go long if DOT loses further. However, the EMA indicators suggest that a reversal towards a bullish momentum is also possible.