MATIC Price Faces Bearish Rejection at Resistance, More Downside Expected
The price of Polygon (MATIC) has recently faced a bearish rejection at a crucial horizontal resistance level, which has resulted in a downward movement. Additionally, the price broke down from a short-term parallel channel, further indicating a bearish trend.
Analyzing the weekly timeframe, it is evident that MATIC experienced rejection from the $0.80 resistance area. Following the rejection, a long upper wick was formed, signaling a shift in momentum from buyers to sellers. The fact that this resistance area previously acted as support since July 2022 adds to its significance. As long as the price remains below this level, the overall trend can be considered bearish.
Furthermore, the weekly Relative Strength Index (RSI) also supports a bearish sentiment. The RSI, a popular momentum indicator, helps traders determine whether a market is overbought or oversold. In this case, the RSI is below 50 and declining, indicating a bearish trend.
Moving to the daily analysis, MATIC broke down from an ascending parallel channel that had been in place since June 10. This breakdown was accompanied by a decrease in price below the channel’s support line. The RSI falling below 50 further strengthens the legitimacy of the price action.
Currently, MATIC is trading just above the 0.618 Fibonacci retracement support level. According to Fibonacci retracement principles, after a significant price movement in one direction, the price often retraces partially to a previous level. If the decrease is corrective, the 0.618 Fib level typically acts as a bottom. Therefore, a bounce could be expected from this level, especially considering the increasing volume of Polygon NFTs. If a bounce occurs, the channel’s support line at $0.80 will be the next expected resistance, followed by support at $0.60.
However, if the price manages to move above the channel’s support line at $0.80, it would invalidate the breakdown and reclaim the $0.80 resistance area. This could potentially trigger a sharp increase in price, with the next target being $1.
In conclusion, the current analysis suggests a bearish outlook for MATIC, with more downside expected. The rejection at the crucial resistance area, coupled with the breakdown from the parallel channel, supports this sentiment. Traders should monitor the price’s behavior around the support and resistance levels mentioned to gauge potential future movements.
