- DOT breaks out of a falling wedge pattern and shows a bullish hammer candlestick, indicating a possible price increase.
- Open interest is rising while the RSI remains neutral, supporting potential upward movement without immediate risk of a pullback.
Polka dot [DOT] is currently experiencing a steady price rebound and is recording consecutive weeks of gains.
Over the past two weeks, DOT is up 14.2%, with an 11% increase in the past week alone. At the time of writing, the token is trading at $4.90, reflecting a 2.3% increase in the last 24 hours.
This consistent upward price movement is supported by several technical indicators that suggest DOT could be in the market edge of a larger rally.
The $11 rally potential
Technical analysis has shown that the current price increase in DOT is associated with the breaking of a falling wedge pattern, a bullish indicator often seen in the financial markets.
A falling wedge pattern forms when price action shows a decreasing downtrend, which is typically followed by an upward breakout, indicating a possible trend reversal.
Source: DOT/USDT on TradingView
Now that DOT has broken out of this wedge, further upward momentum is expected.
While the token remains below $5, the technical implications of the breakout point to the potential for DOT to climb to prices above $11 to fully validate this pattern.
Further strengthening DOT’s bullish outlook is the appearance of a hammer candlestick pattern on the daily chart.
In technical analysis, a hammer pattern is a reversal indicator characterized by a small body and a long lower shadow, indicating that buyers have pushed the price back up after a period of downward pressure.
Source: DOT/USDT on TradingView
This is generally interpreted as a positive sign for potential price increases.
The formation of this pattern, shortly after DOT’s breakout from the falling wedge, provides further confirmation of bullish sentiment, reinforcing the likelihood of a significant rally in the near term.
Basic view of DOT
While these technical signals are encouraging, the question remains whether DOT’s underlying fundamentals support this bullish momentum. To measure this it’s worth examining some key metrics.
Facts from Coinglass indicates that DOT Open Interest – a measure of the total number of outstanding derivatives contracts – rose 3.20% to $233.03 million.
This uptick in Open Interest generally indicates increased market activity and interest from traders.
Source: Coinglass
In contrast, however, DOT’s Open Interest volume has fallen by 15.16% and now stands at $190.48 million.
A rise in Open Interest combined with a drop in volume could mean that while more derivatives positions are being taken, trading intensity is cooling, potentially reflecting cautious investor sentiment.
Another critical factor to consider is the Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements.
Facts from CryptoQuant revealed that DOT’s RSI was a figure of 68 at the time of writing. This value, which is below the overbought threshold of 70, indicates that the asset is currently in neutral territory.
Source: CryptoQuant
Read Polkadots [DOT] Price forecast 2024–2025
Normally, an RSI below 70 indicated that the price has room for further upward movement without falling into an overbought situation that could trigger a pullback.
The neutral RSI thus supported the potential for additional price gains, in line with the technical patterns observed on the DOT chart.
