- Three-box reversal would coincide with a trend line break.
- -27% drop in sight.
Polkadot price is currently trading inside one of the most bearish chart patterns in existence: the Rising Wedge. The rising wedge patterns signal extremes and overbought conditions and are progenitors of massive corrective moves or broader trend changes.
Polkadot price action warns of overdone moves; bulls could get trapped.
Polkadot price is at an inflection point. The bulls remain in charge here, but the threat to the downside is substantial and could trap a good number of bulls. If Polkadot moves down to $36.50, that will initiate a new column of Os and a three-box reversal.
The three-box reversal coincides with a break of the lower trending line in the rising wedge. Utilizing the vertical profit target method in Point and Figure charting, the target zone for bears would be the $27.00 value area. The move could likely extend lower, but support against the dominant bull market trendline should be expected the closer Polkadot price gets to the $27.00 level.
Bears may have to wait a while, however. If Polkadot price moves up to $40.50, then it will enter into price discovery mode. In other words, Polkadot will probably visit its prior all-time highs and then push on to make new all-time highs. As bearish as the rising wedge pattern is, its ability to cause a substantial blow-off top move has a high probability, especially if an instrument is trading at or near all-time highs.
In the event of a breakdown below the rising wedge, bears will want to monitor the break carefully and watch for a retest to confirm an honest move.
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