Cryptocurrency traders are expecting to see a massive breakout for Polkadot following an inverted head and shoulders trading pattern. The eighth biggest cryptocurrency, currently trading at $41, could rally to record highs of $75 technical analysis suggests. However, first, it will need to break the $41 - $45 range.
Polkadot (DOT) Trading Patterns - Long Term Overview
A recent inverse head and shoulders pattern was created when the cryptocurrency underwent three selloffs in one market consolidation period.
The bullish reversal pattern indicates that DOT underwent an initial selloff (left shoulder, as pictured below) before experiencing a short-term price rally, prior to another bigger selloff (creating the head). This was then followed by a small upward correction before undergoing another selloff (right shoulder) taking the price to lows of the first selloff. The small price increases in between selloffs are indicated with the red “neckline”.
This trading pattern was picked up by analysts evaluating Polkadot’s price movements this year. With this information, they then calculate the head and shoulders upside target by measuring the maximum distance between the neckline and the head formation.
In this case, the maximum distance measured between the neckline and head low is approximately $31, indicating that a successful bullish breakout will send the price rallying to roughly $75 (neckline range is $41 - $43).
Polkadot (DOT) Trading Patterns - Short Term Overview
This news comes hot on the heels of Polkadot reaching impressive highs of $41.62 (13 October) this week, not too far behind the previous all-time high of $49.69.
This nearly 30% rally is partly due to Bitcoin’s rally (which is known to drive altcoin prices in the same upward direction), as well as Polkadot’s recent network announcement.
Polkadot Governance Votes For Parachain Auctions
This week, the blockchain platform announced that the first parachain auctions will be going live on 11 November. This marks the final phase of the network’s multi-phase launch process.
Polkadot’s structure is based on a network of parallelized parachains that connect to a “main ledger” known as the relay chain. This allows the network to process multiple transactions at the same time on the application-specific parachains, while maintaining a record of all data on the relay chain.
Directly following the announcement, the DOT price rallied 24%. DOT provides governance, interoperability, utility and bonding functionality in the Polkadot ecosystem.
Following this launch, the network then intends to make the relay chain interoperable with other blockchain networks through the use of specialized smart contracts, as well as implementing “in-built bridging modules”.
Watch this space for announcements regarding Polkadot’s developments and any market news worth knowing.