Polkadot charting (DOT) techniques suggest it could climb to new record highs near $ 75 if DOT can try to close sharply above the $ 41-43 range.
This follows a classic bullish reversal setup known as Inverse Head and Shoulders (H&S) that forms when prices experience three sell-offs during market consolidation.
In particular, the pattern includes an initial sell-off followed by a short-term rally and another – deeper – sell-off. This resulted in another minor correction to the uptrend, followed by another sell-off that bottomed near / on the low of the initial sell-off.
The first and last sales represent the “left” and “right” shoulders, while the second sale represents the “head”. On the other hand, the level around which all short-term rallies intersect represents the “section” of the head-and-shoulders pattern.
Traditional analysts typically calculate an H&S upward target from neck resistance by measuring the maximum distance between it and the head formation.
So it looks like Polkadot has formed a similar bullish pattern on its weekly chart, as shown below.
The maximum distance between the DOT clipping line and the bottom of the head is close to $ 31. Therefore, a successful bullish breakout above the neck line of $ 41 to $ 43 sets the next long-term target followed by around $ 75.
Parachain auctions take place in November
An inverse H&S pattern emerged as DOT gained nearly 30% over the past week to hit a five-month high of about $ 44. The focus of the weekly upward trend is on the price boom in the crypto market and the news of the Polkadot First Parachain Auction, which will take place on November 11th.
In detail, Polkadot’s parachains are application-specific, parallel chains – child ledgers tied to a single parent ledger known as a transition chain. Because of their parallelism, parachains tend to process many concurrent transactions and maintain and record their data in the general ledger by communicating with other chains.
Related: Polkadot Launches Parachain Auction After Governance Vote
This comes from the method of queuing transactions and processing them sequentially.
Five years after the vision of a heterogeneous multifactorial framework was first outlined in the Polkadot whitepaper, Parachains are now ready to go live on Polkadot. Motion 118 to plan the first auctions was accepted by the Council and has now been submitted to a referendum. https://t.co/8pt3aT4vO3
– Polkadot (@Polkadot) October 13, 2021
DOT, which serves as a utility token for fees, governance, interoperability, and interconnection within the Polkadot ecosystem, has grown more than 24% following Parachain’s announcement.
Next, Polkadot aims to introduce a cross-chain feature that will allow its chain to route to external blockchains (Bitcoin, Ethereum, etc.) via special smart contracts. In the meantime, the project is also planning to introduce “built-in bridge modules” designed to improve the interoperability of external blockchains with Polkadot.