Polkadot (DOT) has seen a substantial decline from its all-time high of $55 to around $5.32. According to insights shared by analyst Crypto Patel, DOT is exhibiting bullish signals, potentially setting the stage for a rebound. 

The analysis highlights technical indicators such as a double-bottom formation and overlapping zones that suggest accumulation by “smart money,” adding strength to the potential of an upward breakout.

Crypto Patel’s analysis identifies a liquidity capture in Polkadot’s monthly chart, where the price has swept both buy-side and sell-side liquidity. This consolidation is often viewed as a prelude to major moves by institutional or large-scale investors, known as “smart money.” 

$DOT HTF Smart Money Concept (SMC) Analysis Decline from ATH: ~93%#DOT has captured both buy-side and sell-side liquidity, tested an overlapping zone, and dropped to form a double bottom/equal lows pattern.The price is now showing bullish signals, with potential for… pic.twitter.com/bJjlj1NTJt

— Crypto Patel (@CryptoPatel) November 12, 2024

The formation of equal lows, also referred to as a double bottom, appears at the current price level, strengthening the notion of a support zone that could prompt a reversal if sustained buying emerges.

The double bottom pattern in technical analysis often serves as a strong indicator of a potential reversal. In Polkadot’s case, this level acts as a firm base, protecting the price from further declines while positioning it for a potential upward movement.

Overlapping Zone as a Potential Breakout Indicator

An overlapping zone identified on DOT’s monthly chart presents a pivotal area of focus. This zone, highlighted around the midpoint of DOT’s recent price action, acts as a potential resistance level. 

A breakthrough above this overlapping area could open the path for an extended rally. If Polkadot’s price manages to push through and hold above this region, it would signify increased bullish momentum. Moreover, it increases the likelihood of reaching higher targets.

The analyst suggests an entry point around $5.32, which aligns with the current price level. Breaking past this overlapping zone could lead to a bullish continuation, setting the stage for reaching the outlined profit targets.

Read also: FET Price Plunges, But Here’s Why Holders Shouldn’t Panic

Profit Targets and Risk Management

Crypto Patel’s forecast outlines two profit targets for DOT. The first target is set at $11.88, representing a 123% gain from the entry level, aligned with a previous swing high. 

The second, more ambitious target stands at $55, the previous all-time high, marking a potential 933% increase, contingent on strong market support. The recommended stop loss is $3.50, strategically placed below the double bottom support to protect against potential downside risk.

Smart Money Accumulation and Bullish Prospects

Crypto Patel’s analysis emphasizes the Smart Money Concept (SMC), where large investors potentially accumulate positions around critical support levels, anticipating upward movement. The consolidation of DOT’s price within the overlapping zone suggests smart money accumulation, a common precursor to price reversals. 

The alignment of buy-side and sell-side liquidity captures strengthens the potential for DOT’s price to break out from its current consolidation phase, fueling optimism around achieving the outlined profit targets.

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