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Is Polkadot eyeing $100 next? DOT price jumps 25% triggering classic bullish chart pattern

The bullish outlook appears as Polkadot prepares to auction highly anticipated parachain slots on its network.

Polkadot (DOT) looks poised to rally toward $100 in the coming sessions as it triggers a classic bullish reversal setup.

Dubbed Inverse Head and Shoulders (IH&S), the technical structure appears when an instrument forms three troughs in a row, with the middle one, called the Head, being the lowest, and the other two — known as the right and left shoulders — of almost equal heights. 

Meanwhile, the level at which all the troughs top out represents the "neckline."

So it appears DOT has been forming an IH&S ever since its price correction from the $43-$49 price range (neckline), as shown in the chart below. On Nov. 1, the Polkadot token broke above the area and continued rallying the next day to bring its month-to-date returns to almost 25% while bumping its record high to $53.35.

DOT/USDT daily price chart featuring IH&S pattern. Source: TradingView

The price jump accompanied an increase in trade volumes, showing that traders supported the move above the IH&S neckline. As a result, DOT's prospects of rising by as much as the maximum distance between its IH&S's head and neckline (~$39) improved.

As a result, Polkadot's profit target out of its IH&S setup comes out to be near $90, with possibilities of extended rallies toward $100, a psychological resistance level.

Parachain auction FOMO

Polkadot's latest price rally came as traders' focus shifted on its highly anticipated parachain auctions on or around Nov. 11.

The Polkadot team announced Monday that their council had passed the motion that enables parachain registrations and crowdloan beginning Nov. 4, adding that the proposal now awaits a go-ahead via a public referendum.

In detail, crowdloans enable rivaling projects to raise capital via DOT to bootstrap their parachain auctions.

Therefore, those who support the projects lock their DOT into a sponsored account for a predefined period. In return, they receive rewards in the form of air-dropped tokens from the project competing for the parachain slot.

Kusama fractal

In June, Polkadot's test-net chain, dubbed Kusama (KSM), conducted a similar parachain slot auction in June. The protocol ended up proving the effectiveness of the crowdloan mechanism as users contributed more than 1.11 million KSM across the five parachain auctions.

KSM supply dedicated to its first five crowdloans as of Aug. 6. Source: Subscan, Messari

That represented over 10% of the total KSM supply locked.

Related: Kusama network set to launch its next five parachain auctions

The KSM price rallied in the days leading up to the auction in June. It peaked out on May 16 at around $645 and then dropped over 78% to $138.50 two months later. The selloff also surfaced amid an overall crypto market decline, led by China's full-fledged ban on crypto activities.

KSM/USDT daily price chart. Source: TradingView

Hence, it appears DOT has also been undergoing the so-called "buy-the-rumor" price rally as traders bet higher on the parachain auction event. But in the absence of a China-like event, the cryptocurrency looks to be pursuing the IH&S setup mentioned above.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin counts down to $100K BTC price as shorts risk ‘violent breakout’

Ethereum risks drop below $3.2K as ETH price faces heavy resistance

A confluence of at least three different bearish indicators appears on Ethereum's multi-timeframe charts, suggesting that its ongoing bull run risks exhaustion.

Ethereum's native token Ether (ETH) is at risk of falling below $3,200 in the coming sessions as its rally comes face-to-face with a strong resistance zone.

In detail, the price of Ether swelled by almost 22% on a month-to-date timeframe in the wake of a market-wide price rally. That pushed the second-largest cryptocurrency by market capitalization from under $3,000 to above $3,650 in the first eight days of October, triggering more bullish forecasts.

"Six thousand dollars will happen fast; $10,000 is programmed," noted Twitter-based technical chartist Crypto Cactus. David Gokhshtein, CEO of distributed data network PAC Protocol, predicted a $10,000 upside target for Ether, as well.

But the price of Ether has the potential to ram into a confluence of three notable bearish indicators that could limit its upside moves and pare a portion of its recent gains.

Two resistance zones and a rising wedge

The three bearish indicators that could prompt Ether to undergo a bearish reversal are a rising wedge, a descending trendline resistance, and an interim resistance bar, as shown in the chart below.

ETH/USD 4H price chart featuring bearish confluence. Source: TradingView.com

A rising wedge surfaced as ETH rallied and left behind a sequence of higher highs and lower lows. Meanwhile, the cryptocurrency's uptrend happened against decreasing volume, showing a lack of bullish conviction among traders. 

Additionally, the structure's apex—the point at which its two trendlines converge—is around two historical resistance zones. The first one is an interim resistance bar, as shown in the chart above, that previously called out ETH's top above $3,650.

At the same time, the second resistance is a descending trendline, visible more clearly in the daily chart below at around $3,800.

ETH/USD daily price chart showing the descending trendline resistance. Source: TradingView.com

As a result, the rising wedge's apex and the two resistance trendlines pose bearish reversal risks to Ether. Should it happen, the Ethereum token will crash by as much as the maximum height between the wedge's upper and lower trendlines.

Related: 3 factors that can send Ethereum price to 100% gains in Q4

That puts it en route to below $3,200, which served as an accumulation zone for Ethereum traders in the first half of September 2021.

Activating inverse head and shoulder?

A drop towards or below $3,200 does not necessarily push Ether into a full-fledged bearish cycle. Conversely, it could trigger a bullish inverse head and shoulder setup.

ETH/USD 4H price chart featuring a potential inverse head and shoulders pattern. Source: TradingView.com

If the setup plays out as intended, traders' accumulation of ETH tokens will increase near $3,200, causing a rebound toward the neckline area in the chart above. In doing so, the ETH price would place its inverse head and shoulder target at a length equal to the maximum distance between the pattern's neckline and bottom.

That would put Ether en route to new all-time highs of approximately $4,500.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin counts down to $100K BTC price as shorts risk ‘violent breakout’