Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is solely the opinion of the writer.
Polygon [MATIC] has witnessed a flurry of development activity according to Santimento, but social engagement has seen a decline in the past month. On the charts, MATIC saw a sharp bounce at the $0.94 resistance.
At the time of writing, the momentum was in favor of sellers. However, this could change quickly if Bitcoin [BTC] bulls pulled BTC past $19.4k. Can Polygon’s native token return to the $0.77 support level, or will there be further losses to move towards $0.67?
MATIC- 4-hour chart
The 4-hour chart had a key support level at $0.77, marked in dashed white. In August, this area was price tested multiple times. Each time, the buyers were able to repel the bears.
In late August, the bulls were able to initiate a strong rally to $0.94. This resistance level was a significant resistance zone in early August as well, before the bulls managed to break above.
At the time of writing, the $0.77 support zone has been retested as resistance. This indicated the exhaustion of buyers in recent days. The Relative Strength Index (RSI) on the H4 chart was also below the 40 mark to indicate strong downward momentum.
MATIC- 1 hour chart
The reversal of the significant liquidity zone at $0.77 from support to resistance over the past few days meant that the lower timeframe bias would also have to tilt to the downside. This meant that any price rejection would be for selling.
The last two trading days have shown strong selling pressure in the $0.75-$0.77 region. At the same time, a support level of $0.72 was identified. This level was last tested by MATIC at the end of July.
Therefore, in line with the H4 bias, traders in the lower time frames can also look for downside momentum at $0.722 and $0.677, another support level from mid-July. Bulls would need to reverse the $0.77 level to support to reverse the bearish bias.
The hourly RSI was also below the neutral 50, but not below 40, so the momentum was only slightly in favor of the sellers at the time of writing. The Accumulation/Distribution (A/D) line has actually seen a rally over the past few days following a bounce to retest the $0.77 level as resistance.
The Directional Movement Index (DMI) showed the Average Directional Index (ADX) (yellow) and -DI (red) to move above the 20 mark. The conclusion was that a strong bearish trend is underway according to the DMI.
In the next day or two, Bitcoin could recover if the FOMC announces an already expected rate hike. In such a scenario, bearish bias could quickly turn bullish. However, until MATIC can climb above $0.77, traders can look for selling opportunities.