Disclaimer: Information presented does not constitute financial, investment, business or other advice and is the writer’s opinion only
- MATIC offset more than three-quarters of the gains made in the mid-February rally.
- A bullish divergence between open interest rates and price action could offer bulls hope.
Polygon (MATIC) gave up more than three-quarters of its gains from the mid-February rally. It faced a critical test as it dropped to its multi-week ascending trend line. Although the recent price rejection at $1.55 caused a 20% drop, there was still hope for the bulls if Bitcoin (BTC) holds the psychological level of $23k.
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Can the rising line verify the fall?
Source: MATIC/USDT on TradingView
After the mid-February rally, which saw MATIC rise 34% from $1.1611 to $1.5567, the subsequent correction saw MATIC drop 20%, erasing more than three-quarters of its earlier gains. .
The Relative Strength Index (RSI) was below 50, indicating a bearish structure. If it crosses below the ascending line, the momentum could also turn bearish. Furthermore, the Chaikin Money Flow (CMF) headed south and crossed below the zero line, reinforcing the bears’ leverage in the market.
As a result, the bears may continue to push MATIC below the uptrend line. Short sellers can benefit from additional short selling opportunities at the 100-period exponential moving average (EMA) of $1.1796. The 200-period EMA of $1.0640 could contain a prolonged decline.
Alternatively, the longer-term bulls could aim for $1.3534 or the resistance zone above $1.5, but such a move can only be made if the ascending cross halts the decline.
To read Polygon Price Prediction (MATIC) 2023-24
Open interest has dropped but has shown signs of pivoting at press time.
Source: Coinglass
However, the OI has rallied at press time, forming a divergence with the price, which could indicate a possible price reversal. This development can give bulls hope for a steady ground at the level of the $1.25 ascending cross. However, bulls should wait for a retest of the uptrend and confirmation of an uptrend before entering long positions.
In conclusion, the fate of MATIC hangs in the balance as it drops to its multi-week uptrend line. While bulls may find hope in the bullish divergence between open interest rates and price action, bears still have the upper hand, with the RSI and CMF indicating a bear market structure.