Polkadot (DOT) appears to climb to $ 100 in the upcoming sessions as it establishes a classic bullish reversal pattern.

It is known as “inverse head and shoulders” (IH&S) and occurs when there are three consecutive lows on the chart, with the lowest mid-low being called the head and the other two shallower lows called the right shoulder and shoulder height.

In the meantime, the level above which all floors protrude represents the “cutout”.

So it looks like DOT has formed IH&S from the price range of $ 43 to $ 49 (excerpt) since the price correction, as shown in the following graphic. The DOT rose above this range on Nov. 1 and continued its rally the next day to push monthly returns close to 25% while hitting a record high of $ 53.35.

DOT / USDT daily price chart setup IH&S pattern | Source: TradingView

The rise in price is accompanied by an increase in trading volume, suggesting that traders have made a move beyond the IH&S cutout. As a result, DOT’s upside perspective is very high once IH & S’s maximum head-to-neck distance (around $ 39) is reached.

Hence, DOT’s profit target is close to $ 90 during the IH&S setup and there is the possibility of a longer rally towards $ 100, a psychological resistance level.

FOMO Parachain auction

The most recent DOT bull run comes as dealers’ focus shifts to parachain auctions, which are expected in November.

Team Polkadot has notification on Nov. 1 that their board of directors approved a proposal to allow Parachain registration and crowdfunding from Nov. 5 EST, adding that the proposal is currently pending.

“The petition to allow parachain and crowdfunding was approved by the Polkadot Council and followed by a public referendum. If this is also approved, parachain teams can register for parachain and open their crowdloan on November 5, 2021 (UTC) around 1:15 a.m.

Crowdloan enables competing projects to raise funds through DOT to start their parachain auctions.

Project supporters lock their DOT on a sponsored account for a set period of time. In return, they will receive a reward in the form of an airdrop of tokens from the competing project for the parachain position.

Fractal from KSM

In June, Polkadot’s test network chain called Kusama held a similar site auction. The protocol eventually proved the effectiveness of the crowdfunding mechanism as users contributed more than 1.11 million KSM to five Parachain auctions.

KSM’s offer exclusively for the first crowdloan year since August 6th | Source: Subscan, Messari

This corresponds to more than 10% of the entire blocked KSM offer.

KSM’s price rose during the official auction days in June. It peaked at $ 645 on May 16 and fell more than 78% to $ 138.5 two months later. The sell-off also comes amid a decline in the overall crypto market led by China’s official ban on crypto activities.

Daily price chart KSM / USDT | Source: TradingView

Hence, it appears that DOT is also experiencing what is known as a “buy rumor” as traders place higher bets on the Parachain auction event. However, since there is no event like the one in China, it looks like they will be pursuing the IH&S setup mentioned above.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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According to Cointelegraph

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