Do MATIC bulls have enough muscle to challenge the current bearish pattern
Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
After sliding near the base line of $1.3 for more than three months, the bears of Polygon (MATIC) echoed the market-wide sentiment of fear. As a result, the coin has ignored buying tendencies encouraging strong selling over the past month.
With buyers keen to reject lower prices, a comfortable close above the point of control (POC, red) would position MATIC for a test of the 23.6% Fibonacci level. At press time, the alt was trading at $0.688, up 3.57% in the past 24 hours.
MATIC daily chart
An early April reversal from $1.7 reaffirmed the selling frenzy as MATIC fell below the baseline (green, 20 SMA) of its Bollinger Bands (BB). After dropping more than 70% from April 4, MATIC plunged to its one-year low on May 12. During the descent, the Fibonacci levels of 38.2% and 23.6% posed significant obstacles to recovery.
But the sellers have visibly taken over as the bears have held the alt towards the lower BB band for the past 47 days. Along with several bearish engulfing candlesticks, MATIC saw a bearish pennant on the daily time frame that compressed near its POC.
A close below the POC would increase the chances of a bearish break below the pattern. In this case, MATIC would aim to retest the robustness of its $0.6 zone support. Should the bulls find an upward escape from its pennant bonds, the alt could see itself testing the BB’s base line resistance before continuing its uptrend.
The RSI has seen a much-needed revival after the oversold mark on its highs and lows over the past few days. A potential reversal from its immediate trendline resistance could confirm a bearish divergence with price.
Also, the CMF has a bearish slant. Despite its recent recovery, any pullback from the -0.8 level would result in a bearish divergence. Nevertheless, the AO showed a gradual easing of the selling pressure. Any higher spike below the zero line could lead to a bullish double spike setup.
Admittedly, entering calls may not yet be profitable as it would be betting against the prevailing trend. Buyers could be waiting for a close above the 23.6% level followed by the baseline to pocket the profits from a potential run up.
Additionally, investors/traders should keep a close eye on Bitcoin’s movement, as MATIC shares a staggering 97% 30-day correlation with the King coin.