After an extended six-month corrective phase, Polkadot (DOT) is once again capturing the spotlight; some analysts believe the token may be poised for a significant bullish reversal.
A market analyst known as “World of Charts” points out that there’s a developing pattern of a falling wedge, often seen as a precursor to an upcoming upward movement.
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Polkadot’s technical setup has been steadily gaining momentum, as investors keenly watch for what could be a substantial increase in this promising altcoin.
$Dot#Dot Polkadot is displaying signs of reversal following a six-month corrective phase. The development of a falling wedge pattern, alongside marked bullish divergence on key indicators, indicates a high likelihood of a successful breakout. If confirmed, DOT may aim for… pic.twitter.com/1JpVUM0oHJ
— World Of Charts (@WorldOfCharts1) September 25, 2024
If the broader cryptocurrency market begins to recover, this forecast appears plausible, as Polkadot plays a crucial role in blockchain interoperability and has the potential to attract renewed investor interest.
Falling Wedge: Bullish Reversal Pattern
The falling wedge formation is among the most reliable technical indicators for spotting reversals. The token has been traversing through two downward-sloping trends, effectively narrowing the price range.
This trajectory typically indicates a waning bearish sentiment; as this negative momentum diminishes, the potential for an upward breakout increases. For Polkadot, this trend has been evolving for several months, suggesting that the token may be gearing up for a significant price increase.
Additionally, the relative strength index, a well-known momentum indicator, has recently recorded higher lows even as DOT’s price has trended downward.
This divergence between price and momentum indicates diminishing selling pressure, suggesting that bulls are poised to regain control. The technical configuration supports a potential rally despite anticipated volatility.
Price Growth Potential And Market Sentiment
Given that the token has increased by 13% in the past week, with a notable 2.47% rise in just the last 24 hours, the current market sentiment for Polkadot appears quite optimistic.
These gains reflect a rising demand for DOT, despite uncertainties surrounding broader market conditions. Currently trading at $4.92, the cryptocurrency has a market capitalization of $7.51 billion and a modest increase in trading volume.
The positive outlook for the coming years is even more encouraging. Should DOT break out of its wedge formation, analysts believe the price could approach the $12 resistance level.
Reaching this milestone would mark a significant turnaround from the current downward trend of the token and set the stage for even greater increases in the coming months.
Polkadot: Long-Term Projections
Looking forward, Polkadot’s development potential appears quite promising. Over the next six months, CoinCheckup anticipates a 311% price increase, while it projects an even more impressive 425% rise in the next year.
These projections align with Polkadot’s ongoing network advancements, including new partnerships and a focus on enhancing its cross-chain capabilities.
Featured image from Polkadot, chart from TradingView
