The Polkadot Chart (DOT) suggests the price might reach a new all-time high close to $ 75 if DOT makes a decisive close above the range of $ 41 to $ 43.
This is the scenario presented by a classic bullish reversal pattern known as inverse head and shoulders (H&S) which is formed when the price sees three sell-offs during a period of market consolidation.
Specifically, the pattern consists of an initial sell-off followed by a short-term price rally and another deeper sell-off. This leads to another slight upward correction, followed by a last sell-off concluded near the levels reached by the first.
The first and last sell-offs represent the left and right “shoulders”, while the central sell-off represents the “head.” The level at which all rallies are rejected is instead known as the “neckline” in the pattern.
Typically, traditional analysts calculate the target al rialzo dell’H&S from the neckline by measuring the maximum distance between this level and the lowest point of the head.
As shown below, Polkadot appears to have formed a similar bullish pattern on its weekly chart.
The maximum distance between the neckline and the central low is almost $ 31. Therefore, a bullish breakout above the neckline range of $ 41 to $ 43 places the next long-term target around $ 75.
The parachain auctions will arrive in November
The inverse H&S pattern emerged after the rally nearly 30% in the past week which took DOT to five-month highs of around $ 44. This weekly trend was mainly supported by a price boom in the crypto market and news on the launch of the first Polkadot parachain auction on 11 November.
Polkadot parachains are parallel blockchains for specific applications, registers linked to the central Relay Chain. Due to their parallel nature, parachains tend to process multiple transactions at the same time, as well as keep and record their data on the main ledger, communicating with other blockchains.
Related: Polkadot will debut parachain auctions after governance vote
This system differs from the classic method which arranges transactions in a row and processes them sequentially.
“5 years after the first description of the vision of a heterogeneous multichain framework in the Polkadot Whitepaper, the parachains are now ready for launch on Polkadot. Motion 118, to plan the first auctions, was approved by the board and is now subject to a public referendum. “
5 years after the vision of a heterogeneous multichain framework was first outlined in the Polkadot Whitepaper, parachains are now ready to launch on Polkadot. Motion 118, to schedule the first auctions, has passed council & now gone to public referendum.https://t.co/8pt3aT4vO3
— Polkadot (@Polkadot) October 13, 2021
DOT, which acts as a utility token for fees, governance, interoperability and bonding within the Polkadot ecosystem, has rallied over 24% after the announcement on parachain auctions.
The next step for Polkadot will be the introduction of a cross-chain function which will allow the Relay Chain to communicate with external blockchains (Bitcoin, Ethereum, etc.) through specialized smart contracts. Meanwhile, the project also intends to launch “integrated link modules” that will improve the interoperability of external blockchains with Polkadot.
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