Polygon [MATIC] embarks on a downward move, watch out for this support level
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
Polygon [MATIC] witnessed a spike in development activity according to Santiment, but social engagement has seen a dip over the past month. On the charts, MATIC saw a sharp rejection at the $0.94 resistance mark.
At the time of writing, the momentum was in favor of the sellers. Yet, this could quickly change if Bitcoin [BTC] bulls hauled BTC past $19.4k. Can the native token of Polygon flip the $0.77 level back to support, or would it see further losses to move toward $0.67?
MATIC- 4-Hour ChartThe four-hour chart had a key level of support at $0.77, marked in dashed white. In August, this area saw multiple tests by the price. Each time, the buyers were able to rebuff the bears.
Towards the end of August, the bulls were able to initiate a strong rally to $0.94. This level of resistance had been a significant resistance zone in early August as well, before the bulls were able to force a break above.
At the time of writing, the $0.77 support zone had been retested as resistance. This pointed toward exhaustion on the buyers’ side in recent days. The Relative Strength Index (RSI) on the H4 chart was also below the 40 mark to show strong downward momentum.
MATIC- 1-Hour ChartThe flip of the significant zone of liquidity at $0.77 from support to resistance in the past few days meant that lower timeframe bias would have to lean bearish as well. This meant any bounces on the price would be for selling.
The past two days of trading showed stiff selling pressure in the $0.75-$0.77 region. At the same time, a level of support at $0.72 was also identified. This level had last been tested by MATIC in late July.
Therefore, in line with the H4 bearish bias, lower timeframe traders can also look to ride the downward momentum to $0.722 and $0.677, another level of support from mid-July. The bulls would need to flip the $0.77 level to support to invalidate the bearish bias.The hourly RSI was also below neutral 50 but not below 40, hence momentum was only slightly in favor of the sellers at the time of writing. The Accumulation/Distribution (A/D) line actually saw a surge over the past couple of days following the 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 inference was that a strong bearish trend was in progress according to the DMI.
The next day or two could see Bitcoin recover if the FOMC announces an already anticipated rate hike. In such a scenario, the bearish bias could quickly be flipped to bullish. Until MATIC can climb back above $0.77, however, traders can look for selling opportunities.