POL’s price breaks key resistance – Is a rally to $0.34 next for Polygon?

Key Takeaways

Polygon token seemed to have a strongly bullish outlook on the daily timeframe. Nearby liquidity and Bitcoin’s weakness may be a threat to the bulls in the short-term, but steady progress can be expected in the coming weeks.

Polygon (ex-MATIC) [POL], at the time of writing, appeared to be at a crossroads on the price charts. In fact, there may be a good chance that it would climb past the $0.29-resistance zone in the coming days. At the same time though, broader market dynamics could come into play too.

A short squeeze could be brewing for Bitcoin [BTC]. A large number of short liquidations have built up over the $110k-mark. A bounce towards $111k followed by a bearish reversal seemed possible this week too.

Naturally, such volatility in Bitcoin could spill over into altcoins, including POL, adding pressure even as its own structure turned bullish.

Against this backdrop, AMBCrypto examined whether Polygon token’s rally has the strength to continue, or if market-wide turbulence might stall its progress.

Buying pressure and liquidity hints for POL

In July, the Polygon token’s market structure saw a bullish break on the 1-day timeframe. Another such bullish structure break occurred on Sunday, 31 August.

The Fibonacci extension levels plotted using the June-July rally showed that $0.287, $0.313, and $0.3255 were the next medium-term price targets.

Meanwhile, the CMF was been above +0.05 for the majority of July and August, and supported the idea of bullish strength.

At press time, the CMF stood at +0.15, reinforcing bullish pressure. Combined with a structural break and positive momentum, the chances of a sustained POL rally might be strong.

Liquidity map warns of hurdles

However, the Liquidation Heatmap warned of potential pitfalls for POL bulls, especially leveraged ones. There was a build-up of liquidity in both directions around the price over the past two weeks.

Having said that, in case Bitcoin weakens, POL could retrace towards the $0.27 liquidity pocket before attempting another move higher.

To the north, the $0.29 and $0.295 magnetic zones were also places that threatened a temporary bearish reversal.

On top of that, only sustained buying pressure can help bulls clear these zones decisively. Traders, however, should remain cautious of these hurdles.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion