Polkadot ‘cup and deal with’ setup sees DOT price 50% higher by September

Polkadot (DOT) seems prepared to increase its ongoing price restoration resulting from a traditional bullish sample forming on its every day chart.

DOT paints “cup and handle” sample

Notably, DOT has been forming a “cup and handle” sample since mid-June, confirmed by its price crashing and recovering in a rounding, U-shaped trajectory (cup), adopted by the event of a buying and selling vary on the right-hand aspect (deal with).

DOT/USD every day price chart that includes “cup and handle” breakout setup. Source: TradingView

Cup and deal with patterns are usually bullish continuation setups that kind throughout an uptrend. But in uncommon circumstances, they seem on the finish of a downtrend, resulting in a bullish price reversal. As a end result, DOT’s risk of constant its price restoration appears excessive.

Thus, from the technical perspective, DOT initially eyes a breakout above its cup and handle’s resistance line close to $8.50.

A decisive shut above the resistance line, i.e., a breakout transfer accompanied by an increase in quantity, may have DOT eye roughly $12 as its upside goal by September, up greater than 50% from at present’s price.

Polkadot price breakdown setup

However, DOT’s street to $12 dangers exhaustion resulting from presence of key technical resistance ranges halfway. 

For occasion, the Polkadot token may run into its 100-day easy transferring common (100-day SMA; the purple wave) close to $9.50 solely to tug again towards $8.50. This outlook takes cues from DOT’s price retreat on July 31 from the identical wave resistance (highlighted by a circle signal under).

DOT/USD every day price chart. Source: TradingView

Meanwhile, a breakdown under the cup’s curvy assist may invalidate the bullish cup and deal with setup altogether.

As a end result, DOT may danger an prolonged price correction towards $6.25, which has been serving as assist since June 13 towards a number of downturns. In different phrases, DOT may drop by practically 20% from at present’s price at most by September.

Polkadot community metrics present stability

Along with the broader market, Polkadot skilled a pointy decline in its market capitalization primarily resulting from macroeconomic turbulences. As of Aug. 2, the mission’s internet valuation was $7.92 billion versus its report excessive of $55.51 billion in November 2021.

In comparability, Polkadot’s community metrics are more healthy. For instance, it noticed 145,000 month-to-month customers in Q2/2022 versus 149,000 month-to-month customers in Q1/2022, in accordance with Messari’s quarterly DOT report in July.

Polkadot account and transfers. Source: Messari/Subscan

Similarly, DOT transfers remained virtually the identical quarter over quarter, averaging 293 million per 30 days in Q2 versus 288 million in Q1. Interestingly, the height accounts and transfers’ readings in November 2021 had been resulting from inaugural parachain auctions.

Stable community exercise underlines a persistently natural demand for DOT tokens. Nonetheless, it stays considerably down from all-time-highs, which means Polkadot would want to do extra to draw new tasks for its parachain-enabled community.

XCM launch and grant

Nicholas Garcia, a researcher at Messari, says that Polkadot may achieve extra adoption with its Cross-Consensus Message Format (XCM). This recently-launched software permits parachains to relay messages to 1 one other.

Related: Polkadot’s founder broadcasts steps towards full decentralization with new governance mannequin

“Developing new functionality and use cases will showcase the power of the network and may reignite user interest and activity,” Garcia famous, including:

“Polkadot must continue onboarding parachains and connecting them with XCM.”

Web3 Foundation, which oversees grants on Polkadot, accredited 415 tasks in late July, starting from growth tooling and wallets to sensible contracts and consumer interface growth. The transfer ensures additional potential demand for DOT.

The views and opinions expressed listed here are solely these of the creator and don’t essentially replicate the views of Cointelegraph.com. Every funding and buying and selling transfer includes danger, it’s best to conduct your individual analysis when making a call.

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