Polkadot's platform-native cryptocurrency, DOT, has shed more than 20% of its value since the start of 2024, exhibiting weakness for 6 weeks following its ascendance to impressive highs in March.

DOT has undergone a steep correction and our technical readings point out that the cryptocurrency may be approaching its bottom and is likely set to soar in the foreseeable future.

4-hour time frame analysis

DOTUSD - 4 Hour Time Frame Analysis

Typically, a market correction persists until both sellers from a local or absolute high and buyers anticipating a trend reversal find their respective counterparts.

It's important to clarify that the traders referred to here are categorized as non-commercial, distinguishing them from retail traders. Currently, we are observing a bearish correction, targeting an area characterized by significant sell-side liquidity.

An example of such a scenario occurred on April 13, although the price failed to initiate a follow-through bullish impulse, indicating the need for another round of sell-side liquidity selection where counterparts might engage and execute trades.

At present, the price continues to decline, having already experienced the first internal sell-side liquidity (SSL) selection.

The next target area is set at a price of $6,276. Traders considering entry into buy positions should await clear bullish signals such as structural changes on lower timeframes, the emergence of an Order Block, or an Inversion Fair Value Gap (IFVG) following a liquidity spike.

Should the price also reach the second zone of internal SSL without any bullish confirmatory signals, it is highly probable that the correction will extend further.