Polygon [MATIC] drops by 7% – Will $1.082 support hold?

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

• MATIC was extremely bearish, and the RSI hit the oversold zone. 
• A negative exchange flow balance was noted; supply on exchange increased.

Polygon’s [MATIC] value depreciated by over 7% in the last 24 hours, and it has dropped to key support of $1.0818, which may slow or stop the plunge.

The asset broke below its parallel channel pattern and a significant confluence of supports at $1.12, giving sellers more leverage to devalue the asset. 

However, the $1.0818 support has checked a few previous plunges and could give bulls some slight hope if it comes to rescue one more time. 

Read Polygon [MATIC] Price Prediction 2023-24

Will the $1.0818 support hold?

The $1.0818 level has been a crucial support at the end of March and throughout the second half of April. In addition, the RSI and stochastic RSI retreated and hit the oversold territory, which implies that selling pressure increased, but sellers may seek a break. 

Moreover, the rising OBV (On Balance Volume) suggests MATIC saw an uptick in demand at the current discounted levels and could boost a recovery. 

If that’s the case, MATIC could recover but must deal with the hurdle near the confluence area of $1.12. The area lines up with an ascending trendline (yellow line) and 200-MA (blue line).

The next immediate resistance level is $1.14, an intersection of the channel’s lower level and 50-EMA (orange line). These two hurdles must be cleared before MATIC returns to the previous price range of $1.139 – $1.189. 

However, near-term bears could gain more leverage if price action closes below the $1.0818 support.

The downswing could devalue MATIC to $1.0553 or the recent swing low of $1.0261. These levels can act as short-selling targets in such an extended plunge scenario.

Supply on exchange increased: exchange flow balance declined

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On-chain metrics showed mixed signals for MATIC, at the time of writing. For example, the supply on exchange increased, indicating more MATICs were available on CEXs for offloading – an elevated short-term selling pressure. 

On the other hand, the exchange flow balance was negative, implying that more MATIC was moved out of exchanges – a short-term accumulation trend.

But there was also increased whale activity transacting over $1 million that may influence MATIC’s price direction. Therefore, investors should track this front alongside BTC’s price movement for optimized trade setups.