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Polkadot (DOT) has shown signs of mid-term bullish momentum following a significant breakout from a falling wedge pattern, amidst mixed market sentiment.
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Trading volume surged by 88.09%, indicating strong investor interest, though future performance remains uncertain as technical indicators send mixed signals.
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“Increased network activity is largely driven by Polkadot’s parachains rather than the native chain,” noted a recent report from COINOTAG.
Polkadot’s recent falling wedge breakout hints at mid-term bullish potential, yet mixed indicators suggest caution for investors eyeing DOT’s future.
Falling wedge breakout: Will the bulls take charge?
Polkadot has recently been trading within a bullish falling wedge pattern, indicating a potential price reversal after a downtrend. Following a short-term rally, DOT has gained significant bullish momentum, successfully breaking above the critical resistance level of $5.0.
This movement signifies a challenge to the descending trendline, indicating that if DOT can maintain this upward trajectory, it may target the next resistance level at $9.07. Should the momentum persist beyond this point, the psychological mark of $10.31 could become the next focus for bulls.
However, should the price fail to hold above the falling wedge pattern, a retest of the $5.0 support level and potentially lower prices could ensue.
Source: X
According to Cryptowaves, Polkadot’s 24-hour Relative Strength Index (RSI) has shown a rise to 45.64, increasing to 56.81 on the 4-hour chart, indicating heightened buying pressure alongside elevated trading volumes. Data from TradingView also supports this, revealing short-term moving averages (10-20 EMA/SMA) reflecting bullish momentum, while mid- to long-term averages suggest potential resistance.
The current Long/Short Ratio of 2.64 further underscores the prevailing bullish sentiment among investors.
Source: Coinalyze
A look into the on-chain metrics
Recent data from Coinalyze highlights a 6.7% decrease in DOT’s 24-hour Open Interest. Interestingly, according to DefiLlama, the DeFi activities within the Polkadot ecosystem are primarily taking place on its parachains rather than the main chain. This trend points to a shifting focus among users towards leveraging the opportunities presented by Polkadot’s growing array of parachains.
Despite seeing moderate growth in active addresses since late 2024, the latest figures indicate a gradual decline in active engagement this month, which poses a concern for future price stability.
Source: TheBlock
So, what next?
The future trajectory of Polkadot is largely dependent on the expansion of its entire ecosystem. The native token, DOT, requires sustained >buying pressure to remain above the bullish falling wedge formation in the forthcoming weeks.
Investors are likely to closely monitor DOT’s short-term performance, while also diversifying their interests across its parachains, indicating a preference for a broader long-term commitment to its ecosystem.
Conclusion
In summary, while the recent breakout from the falling wedge illustrates potential bullish momentum for Polkadot, investors should remain vigilant due to the mixed technical indicators and shifting on-chain metrics. Sustaining above key resistance levels and monitoring network activity will be crucial in determining DOT’s near-term outlook.
