Technical factors on the DOT chart suggest that the price could rise to a new record high near $ 75 if it closes well above the $ 41-43 range.
Predictions are derived from the classic bullish head and shoulders reversal (H&S) setup that forms when prices sell out three times during a market consolidation.
In particular, this pattern includes movements: sell-off – short-term uptrend – lower sell-off. This move resulted in another minor correction to the upside, followed by another sell-off that bottomed near / on the low of the initial sell-off.
Inverted head and shoulder pattern | Source: ThinkMarkets
The first and last sell-out represent the “left” and “right” shoulder, while the second represents the “head”. On the other hand, the peaks of the short-term rallies represent the “section” of the head-and-shoulders pattern.
Traditional analysts usually calculate the H&S upward target from neck resistance by measuring the maximum distance between it and the head.
So it looks like DOT has formed a similar bullish pattern on the weekly chart.
Weekly DOT Price Chart and Inverse Head and Shoulders Setup | Source: TradingView
The maximum distance between the cutout and the bottom of the top of the DOT chart is close to $ 31. Hence, a successful bullish breakout above the $ 41-43 neckline sets the next long-term target at $ 75.
Parachain auctions take place in November
An inverse H&S pattern emerged as DOT gained nearly 30% last week to hit a five-month high of around $ 44. The main cause of the weekly uptrend is the price boom in the cryptocurrency market, combined with the news that Polkadot’s first parachain auctions will be held on 11/11. will take place, as reported by Bitcoin Magazine.
Polkadot’s Parachain is a private, parallel chain of applications that are child ledgers tied to a single parent ledger called the Relay Chain. Because of their parallelism, parachains tend to process many transactions at the same time and maintain and record data in the general ledger by communicating with other chains.
It does this by queuing transactions and processing them sequentially.
DOT serves as a utility token for fees, governance, interoperability and interconnection within the Polkadot ecosystem. Its price rose more than 24% after the Parachain auction was announced.
Next, Polkadot will introduce a cross-chain function that allows Relay Chain to communicate with external blockchains (Bitcoin, Ethereum, etc.) via a special smart contract. In the meantime, the project is also planning to introduce “built-in bridge modules” designed to improve the interoperability of external blockchains with Polkadot.
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According to Cointelegraph