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 advice and is solely the opinion of the author.
polygon [MATIC] According to Santiment a spike in development activity has been witnessed, but social engagement has seen a decline in the last month. On the chart, MATIC saw a sharp rejection at the $0.94 resistance mark.
At the time of writing, momentum was in favor of sellers. However, this could change quickly if Bitcoin [BTC] Bulls took BTC past $19.4k. Can Polygon’s native token bounce back to the $0.77 level for support, or will it see further losses heading towards $0.67?
MATIC- 4-Hour Chart
There was a key level of support at $0.77 on the four-hour chart, marked in dashed white. In August, this area saw multiple tests by price. Each time, the buyers were able to rebuke the bear.
In late August, the bulls were able to start a strong rally to $0.94. This level of resistance was also a significant resistance zone in early August, before the bulls were able to break above.
At the time of writing, the $0.77 support zone was retested as resistance. This points to weariness on the part of buyers in recent days The Relative Strength Index (RSI) on the H4 chart was below the 40 mark to show strong downward momentum.
MATIC- 1-Hour Chart
A significant zone flip of liquidity from support to resistance at $0.77 over the past few days means that the lower timeframe bias should also lean bearish. This means that any bounce on the price will be for sale.
Trading over the past two days has shown strong selling pressure in the $0.75-$0.77 region. At the same time, a level of support was also identified at $0.72. This level was last checked by MATIC in late July.
Therefore, in line with the H4 bearish bias, lower timeframe traders may also move to the downside momentum at $0.722 and $0.677, another level of support from mid-July. The bulls need to flip the $0.77 level for support to invalidate the bearish bias.
The hourly RSI was below neutral 50 but not below 40, so at the time of writing momentum was slight in favor of sellers. The Accumulation/Distribution (A/D) line has actually seen a rise over the past few days after a bounce to retest the $0.77 level as resistance.
The Directional Movement Index (DMI) has shown the Average Directional Index (ADX) (yellow) and -DI (red) to move above the 20 mark. The assumption was that a strong bearish trend is underway as per the DMI.
Bitcoin may recover in the next day or two if the FOMC announces an already expected rate hike. In such a scenario, the bearish bias can quickly reverse to bullish. Until MATIC can rise above $0.77, however, traders can look for selling opportunities.