Polygon (MATIC) has reclaimed the $0.80 horizontal support area. While there is a short-term bullish pattern, the direction of the longer-term trend is unclear.
Polygon is a platform that provides a scaling solution for the Ethereum (ETH) blockchain. It aims to transform the network into a multichain system, thus being able to be considered an internet of blockchains.
What was formerly known as the Matic Network was renamed to Polygon in February 2021. Similar to the Ethereum network, it uses proof-of-stake (PoS) consensus.
The price of its native token, MATIC, had been below a downtrend line since December 2021. At the time, it had just reached an all-time high of $2.92. The downward movement ended in June this year with a low of $0.31.
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The token price has been rising ever since. In July, it broke both the downtrend line and the $0.80 horizontal area. The area is now supporting (green icons). The closest resistance area is at $1.70. The weekly RSI shows indecision as it sits right at the 50 line.
Therefore, MATIC falling out of the $0.80 area could have huge implications for the futures price. A decline would also cause the RSI to drop below 50, suggesting that the price forecast is bearish.
On the other hand, a bounce from the $0.80 area could be the catalyst for a bullish move towards $1.70.
MATIC creates a double background pattern
On Tuesday (22), Magic Eden, one of the leading NFT marketplaces on the Solana network, announced that it would add Polygon as the third blockchain on its platform. MATIC’s price has been rising ever since, despite a small drop in the last 24 hours.
Six-hour technical analysis shows that Polygon price has created a double bottom pattern (green icons). The second bottom occurred after the asset broke a short-term downtrend line. However, the pattern was not combined with a bullish divergence on the RSI, reducing its validity somewhat.
If the pattern validates, it could lead to a bounce towards the $1.10-$1.20 resistance area. This would complete wave C of an ABC structure. On the other hand, a drop below the second bottom of $0.76 would invalidate this MATIC price prediction.
$0.80 level will determine trend direction
The daily chart provides some unclear signals, mainly the daily movement of the RSI above and below 50.
However, there is a bullish signal in the form of a breakout and recovery. MATIC price deviated below the $0.80 area in September 2021 (red circle). He regained the area soon after. Since then, it has followed an uptrend line.
Therefore, the $0.80 area can be considered a boundary for the trend direction. A close below suggests the trend will be bearish.
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