Polygon (MATIC): This key level will determine the future trend
Date: 2023-07-04 Author: Karina Ziganova Categories: BLOCKCHAIN
The price of Polygon (MATIC) has risen since June 10, forming two rising lows and strengthening by 30%. However, the price has not yet confirmed the bullish trend reversal
Polygon in the horizontal range
As the results of the technical analysis of the weekly chart show, the MATIC picture is bearish for a number of reasons.
Bearish signs appeared as soon as the price made a bearish breakout from the long-term ascending parallel channel. This indicated the end of the previous uptrend and the beginning of a new bearish trend.
Then, in early June, the pace of decline accelerated, which led to a breakdown of the $0.75 area and sent the price to the horizontal support level of $0.53. Now the price of MATIC is trading between these two levels.
The weekly Relative Strength Index (RSI) is also bearish, supporting a continuation of the decline. Using the RSI as a momentum indicator, traders can determine whether the market is overbought or oversold and decide whether to accumulate or sell the asset.
Bulls have an advantage if the RSI values exceed the 50 mark and the trend is upward, and vice versa. In the case of MATIC, the RSI index is below 50 (red icon) and is declining, indicating a downtrend.
The indicator fell below 50 at the same time that price made a bearish breakout from the channel, thereby reinforcing this breakout.
Will MATIC be able to break through the resistance?
A shorter-term six-hour timeframe shows that the price of MATIC has formed several rising lows. This may be the first sign of a bullish structure.
However, price action also suggests bearish signs, such as the presence of an ascending parallel channel. Such channels are usually associated with corrective movements and lead to bearish breakouts.
Despite the fact that the price of MATIC is currently trading at the top of the channel, the resistance line of this channel coincides with the important 0.5 Fibo resistance level of the retracement at $0.74.
Thus, it is likely that the entire price movement is just a relief rally in response to the previous decline.
If this is true, then the price of MATIC will rise to a high of $0.75, after which it will collapse to the long-term support level of $0.53.
Despite this bearish outlook on MATIC, a bullish price breakout from the channel will mean that the trend remains bullish.
Since the resistance level of $0.75 is both a Fibonacci level and an area of long-term horizontal resistance, overcoming it will confirm a trend reversal in the bullish direction.
