Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice
Polygon’s native token MATIC posted strong gains over the past week as it climbed from $1.49 to $2.1 before being rejected at a prolonged resistance level. Polygon has had some positive news in recent weeks, such as setting a dApp milestone. However, selling pressure on Bitcoin in the roughly twelve hours leading up to the time of writing caused MATIC to take a hit as well.
Source: MATIC/USDT on TradingView
The $2 area was a round number resistance level. Also a long-lasting resistance level. The price has tested this level twice in quick succession in the past few days and appeared primed to climb higher. However, bullish momentum has begun to weaken even as the price tried to move higher – a sign of weakness. Over the next few hours, BTC also dropped from $45.4k to $43k.
As per the charts, the price moved above the $1.84 level, which is a near-term support level. Over the past two weeks, it has been trading within a range (yellow) of $1.49 to $1.74 for some time. Therefore, the range highs and the highs recorded on the charts just before a real breakout of the range were at $1.75 and $1.73, an area that could act as support if the price drops below $1. 82 would drop.
At the time of writing, the short term market structure has been bearish – the $2 highs failed to break, while the previous higher low of $1.88 saw a session close below. The path forward could be further lower in search of demand.
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Source: MATIC/USDT on TradingView
The price tested $2 just a few days apart, but over the same period, the RSI showed a decline on the hourly chart. This meant that the bullish momentum weakened, although the price moved higher. This bearish divergence was followed by a plunge towards USD 1.82. The 21 SMA (orange) also formed a bearish crossover with the 55 SMA (green).
The cumulative delta volume shows that demand has remained stable behind MATIC since the end of January. This showed that the price rally was real, and pullbacks in the coming days are likely to be buying opportunities.
Inference
Demand can be seen behind the price increase and some near-term support levels of $1.82, $1.73 and $1.61 (mid-range) have been identified. The market structure has flipped from bullish to bearish in the short term, meaning some caution was advised when buying the dip at the above levels. A move of Bitcoin below $43k could drag the altcoin market down.
This post With Selling Pressure on BTC, MATIC Will Move Past $2 in February
was published first on https://ambcrypto.com/with-selling-pressure-on-btc-will-matic-break-past-2-in-february/
