Polkadot (DOT) Eyes Reversal: Falling Wedge Pattern Signals Potential Surge Toward $22

Polkadot's DOT token is flashing a classic reversal signal—and traders are taking notice. After weeks of consolidation, a falling wedge formation on the charts suggests the next major move could be up.

The Technical Setup

A falling wedge is typically a bullish continuation pattern. It forms when the price makes lower highs and lower lows within two converging trendlines. The squeeze indicates selling pressure is exhausting. For DOT, the pattern's completion projects a breakout target near the $22 mark—a significant psychological and technical level.

Market Mechanics at Play

This isn't just lines on a chart. The pattern reflects a shift in supply and demand dynamics. Sellers are losing conviction at lower prices, while accumulation is likely happening beneath the surface. A decisive close above the wedge's upper trendline would confirm the bulls have taken control, potentially triggering a wave of algorithmic and momentum buying.

Context is Everything

Remember, technical patterns don't exist in a vacuum. They need fuel. For DOT, that fuel could come from broader crypto market strength, positive developments within the Polkadot ecosystem, or simply a rotation of capital from overbought large-caps into mid-cap assets. Of course, in crypto, a 'sure thing' is often just a liquidity trap dressed up with fancy geometry—never forget that.

The bottom line? The chart is setting the stage. A confirmed breakout puts $22 squarely in the crosshairs. Until then, watch the trendlines.

Technical Structure Remains Cautious but Improving

From a technical standpoint, the token is attempting to witness the beginning of a short-term recovery from the oversold conditions on the weekly chart. However, the general trend is that the cryptocurrency is holding onto the bearish trend. It is still staying below the 20-week simple moving average (SMA) at $3.06. The upper band of the Bollinger Bands is set at $4.80.

However, the momentum indicators show deceleration in the selling pressure. The relative strength index (RSI) is currently around 36 for the weekly chart, showing weak momentum. Also, the MACD is in the negative zone, but the increasing histogram indicates weakening sell momentum. Strong support levels are around $2.00 and $1.30, while $2.70, $3.10, and $4.80 Bollinger Band levels act as resistances.

Falling Wedge Pattern Shapes Long-Term Outlook

According to crypto analyst @butterfly_chart, a clear falling wedge has been formed in the DOT weekly chart since peaking in 2021. This has been accompanied by a series of lower highs and lower lows, although it appears that bearishness has been slowing down. The token has just experienced a strong bounce from strong support levels at $1.70 to $1.90.

The current market activity at $2.11 corresponds to early accumulation, driven by higher market volumes against the lower boundary of the wedge. The immediate level of resistance lies between $2.60 and $2.80, then a strong breakout level exists between $3.20 and $3.50. It WOULD mark a strong reversal from a downtrend if it closes above this downtrend line.

If the breakout is sustainable, the target prices are in sync with the measured MOVE in the wedge. The initial targets are $5.00 to $5.50, then $8.00 to $10.50. On a stronger bullish cycle, the targets go to $18 to $22. A breach below $1.70 might reduce the bullish case to $1.30 to $1.50.