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

Polkadot’s (DOT) bullish pattern on its daily chart suggests that it is ready to continue its price recovery.

DOT colors “cup and handle” pattern

Notably, DOT has been forming a “cup-and-handle” pattern since mid June. This was confirmed by its price crashing, recovering in a rounding U-shaped trajectory, followed by the development a trading range (handle) on the right-handside.

Daily price chart for USD/DOT with “cup and handle”, breakout setup. Source: TradingView

Cup and handle patterns are bullish continuation setups. They usually form during an uptrend. Rarely, however, they can appear at the end a downtrend leading to a bullish price reverse. The possibility of DOT continuing to recover its prices seems high.

Technically speaking, DOT sees a breakout above the cup and handle’s resistance level at $8.50.

A decisive close above resistance, that is, a breakout move with a rise of volume, could put DOT eye approximately $12 by September as its upside target, more than half the price since Aug.’s price.

Price breakdown for Polkadot

However, DOT’s path to $12 is at risk of exhaustion because of the presence key technical resistance levels halfway.

The Polkadot token could reach its 100-day simple movement average (100 day SMA; the purple waves) at $9.50, only for it to rebound towards $8.50. This outlook is based on DOT’s July 31 price retreat from the same wave resistance (highlighted with a circle sign below).

Daily price chart for USD/DOT Source: TradingView

A break below the cup’s curvy support may cause the bullish handle and cup to be invalidated.

DOT may suffer a prolonged price correction to $6.25. This is despite the fact that DOT has served as support since June 13, against several downturns. Accordingly, DOT’s August 2 price could fall by as much as 20% by September.

Polkadot network metrics show stability

Polkadot saw its market capitalization decline along with the wider market. This was mainly due to macroeconomic turmoils. The project’s net value was $7.92 billion as of August 2, compared to its record high of $55.51 in November 2021.

Polkadot’s network metrics, however, are better. According to Messari’s July quarterly DOT report, Polkadot had 145,000 users per month in Q2/2022 and 149,000 in Q1/2022.

Transfers and accounts at Polkadot Source: Messari/Subscan

Similar to DOT transfers, they remained nearly the same quarter-over-quarter, at an average of 293 million per monthly in Q2 compared with 288 million in Quarter 1. It is interesting to note that the November 2021 peak accounts and transfers readings were due to parachain auctions.

A steady network activity demonstrates a consistent organic demand for DOT tokens. It is still significantly lower than its all-time highs. This means that Polkadot will need to do more in order to attract new projects to its parachain-enabled network.

Launch and Grant of XCM

Nicholas Garcia, a Messari researcher, believes that Polkadot’s Cross-Consensus Message Format, (XCM), could be more popular. Parachains can now relay messages to each other using this newly-launched tool.

Related: Polkadot founder announces steps towards full decentralization and a new governance model

Garcia stated that “developing new functionality and use cases will show the power of the internet and may reignite users interest and activity.”

“Polkadot should continue to board parachains and connect them with XCM.”

The Web3 Foundation oversees Polkadot grants and approved 415 projects in July. These range from development tooling and wallets, smart contracts, and user interface development. This move will increase the demand for DOT.

com. You should do your research before making any investment or trading decision.
https://cointelegraph.com/news/polkadot-cup-and-handle-setup-sees-dot-price-50-higher-by-september

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