Polkadot and Kusama stole the crypto spotlight after the community approved the first parachain auctions on DOT’s network.
Key Takeaways
- The first Polkadot parachain auctions will begin in November.
- Following the proposal approval, DOT and KSM have surged by more than 16%.
- Now, both assets look set could retrace before advancing further.
Speculation is mounting around DOT and KSM as the first Polkadot auctions have been slated for launch in November. Despite the optimism among market participants, both cryptocurrencies look primed to retrace before posting higher highs.
Polkadot Ready for Parachain Auctions
The first parachain auctions on Polkadot are set to begin on Nov. 11 after the success of Kusama’s parachains.
These parachains are said to be the “last piece of core functionality” needed for the Polkadot network to realize its goal of multi-chain interoperability. Essentially, they are crucial to deciding which projects will be selected to receive the right to develop a parachain integrated on Polkdot’s blockchain.
Wednesday’s proposal approval appears to have been welcomed by the crypto community as the DOT and KSM’s price surged in tandem. Both assets gained more than 16% in market value shortly after the voting process took place.
Now, Polkadot and Kusama could be bound for a brief correction before the continuation of the uptrend.
DOT Presents Sell Signal
The Tom DeMark (TD) Sequential indicator has flashed a sell signal on Polkadot’s daily chart. The bearish formation developed as a green nine candlestick, anticipating a one to four daily candlesticks correction.
DOT’s daily chart reveals that the TD setup has been accurate in anticipating local tops on the asset’s trend. The last three sell signals that this indicator has presented since Aug. 1 were all validated, resulting in significant retracements. Therefore, an increase in profit-taking around the current price levels could help confirm the short-term bearish thesis.
The Fibonacci retracement indicator, measured from the all-time high at $49.90 to the Jul. 20 low of $10.40, suggests that a rejection from the $41.40 resistance level could push Polkadot to the $34.80 support barrier. Failing to hold above this critical demand wall could see prices drop further toward the 50% or 38.2% Fibonacci retracement level. These interest areas sit at $30.10 and $25.50 respectively.
It is worth noting that the pessimistic outlook could be invalidated if Polkadot can close above the $41.4 resistance. Breaching this supply zone could see DOT retest the all-time high at $49.90 or reach a new milestone at $60.60.
Kusama Reaches Critical Resistance
Kusama’s price action has primarily been contained in a tight trading range since Sep. 21. The 50% Fibonacci retracement level at $384 is acting as resistance, while the 61.8% Fibonacci retracement level at $327 is serving as support.
Every time KSM has risen to the overhead supply barrier in the past few weeks, a rejection has occurred, pushing prices back to the underlying demand wall. From this point, it has frequently rebounded and repeated the same price action.
Now that Kusama has reached the $384 resistance zone, it is reasonable to assume that a correction toward the $327 support is underway. A daily candlestick close outside of this tight range should determine where KSM will be heading next.
A decisive close above the overhead resistance level could see Kusama rise toward $441 or even $512. However, if bears take control of the price action to send KSM below $327, a downswing to $245 could be imminent.