Polygon [MATIC] drops to ascending trendline: Can bulls prevail?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- MATIC has cleared over three-quarters of the gains made from the mid-February rally.
- A bullish divergence between open interest rates and price action could offer bulls hope.
Polygon [MATIC] has given up over three-quarters of its gains from the mid-February rally. It faced a critical test as it dropped to its multi-week ascending trendline. While the recent price rejection at $1.55 caused a 20% depreciation, there was still hope for bulls if Bitcoin [BTC] maintained the psychological level of $23k.
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Can the ascending line check the drop?
Following the mid-February rally, which saw MATIC surge by 34% from $1.1611 to $1.5567, the subsequent correction caused MATIC to drop by 20%, erasing more than three-quarters of its previous gains.
The Relative Strength Index (RSI) was below 50, indicating a bearish structure. If it crosses below the ascending line, the momentum could also shift to bearish. Furthermore, the Chaikin Money Flow (CMF) has headed south and crossed below the zero line, reinforcing the bears’ leverage in the market.
As a result, bears may continue to devalue MATIC below the ascending trendline. Short-sellers could benefit from additional shorting opportunities at the 100-period exponential moving average (EMA) of $1.1796. The 200-period EMA of $1.0640 could check an extended drop.
Alternatively, long-term bulls may aim for $1.3534 or the overhead resistance zone above $1.5, but this move can only be made if the ascending line stops the plunge.
Read Polygon’s [MATIC] Price Prediction 2023-24
Open interest declined but showed signs of pivot at press time
Nonetheless, OI rose at press time, forming a divergence with price, which could indicate a potential price reversal. This development may give bulls hope for steady ground at the ascending line level of $1.25. However, bulls must wait for a retest on the ascending line and confirmation of an uptrend before entering long positions.
In conclusion, the fate of MATIC hangs in the balance as it drops to its multi-week ascending trendline. While bulls may find hope in the bullish divergence between open interest rates and price action, the bears still have the upper hand, with the RSI and CMF indicating a bearish market structure.