Can Polkadot (DOT) pull off a 70% breakout based on bullish technicals?

YEREVAN (CoinChapter.com) – Polkadot’s (DOT) has formed a “Falling Wedge” pattern, with the price fluctuating inside two descending, converging trendlines.

Falling Wedges are considered bullish reversal patterns, which increases DOT’s possibility of escaping its bearish trend in the coming weeks.

Also, a Falling Wedge breakout typically leads to the price moving by as much as the maximum distance between the structure’s trendlines. That pins the target value at $11, over 70% higher than the current price.

Other factors at play for DOT

However, before DOT can break out, it needs sufficient weight from traders willing to buy the asset and create demand, boosting the price. As the trading volumes declined on July 14 compared to the previous day’s results, the Polkadot token could retreat to the Wedge’s support before attempting an upside move.

Meanwhile, DOT picked additional bullish cues from an ongoing divergence between its falling prices and rising momentum.

Also read: Inflation at 9.1% deflates Bitcoin’s recovery hopes – what to expect?

In detail, DOT’s price has been printing lower lows compared to its daily relative strength index (RSI), a momentum oscillator forming higher lows. That signals a weaker downside momentum, meaning the price could undergo a bullish reversal.

Can DOT pull off a solo rally?

Broader market conditions don’t favor the bulls. Given the latest CPI results and the whopping 9.1% inflation, market recovery is not a given in the current quarter. As risk-on assets suffer in turbulent economic conditions, Bitcoin will likely join the pack.

Altcoins can offer higher gains than Bitcoin in periods commonly referred to as altcoin seasons. However, intensifying recession fears and the DeFi market instability paint a grim picture for the short term. Can Polkadot rise above the pack? A solo rally seems unlikely, despite bullish technicals.