Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author
- MATIC has wiped out more than three-quarters of the gains made since the mid-February rally.
- An upward divergence between open rates and prices could offer hope to bulls.
Polygon [MATIC] has given up more than three-quarters of its gains since the mid-February rally. It faced a critical test as it broke into a multi-week uptrend line. While the recent price rejection to $1.55 caused a 20% devaluation, there was still hope for bulls if Bitcoin [BTC] maintained the psychological level of $23 thousand
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Can the uptrend control the downtrend?
Source: MATIC/USDT on TradingView
After the mid-February rally that saw MATIC rise 34% from $1.1611 to $1.5567, the subsequent correction sent MATIC down 20%, erasing more than three-quarters of its previous gains.
The relative strength index (RSI) was below 50, indicating a bearish structure. If it crosses below the bullish line, the momentum could also shift to the downside. Additionally, Chaikin Money Flow (CMF) headed south and crossed below the zero line, reinforcing bearish leverage in the market.
As a result, bears may continue to undervalue MATIC below the uptrend line. Short sellers could take advantage of additional shorting opportunities at the 100-period exponential moving average (EMA) of $1.1796. The 200 period EMA of $1.0640 could check an extended decline.
Alternatively, long-term bulls may target $1.3534 or the resistance zone above $1.5, but this move can only be made if the uptrend line stops the dive.
Reading Polygon [MATIC] Price Prediction 2023-24
Open interest declined but showed signs of turning around at press time
Source: Coinglass
However, OI rose at press time, forming a divergence with price, which could indicate a possible price reversal. This development may give bulls hope for solid ground at the upside of $1.25. However, bulls should wait for a retest of the uptrend line and confirmation of an uptrend before entering long positions.
In conclusion, MATIC’s fate hangs in the balance as it falls to its multi-week uptrend line. While bulls may find hope in the bullish divergence between open rates and prices, bears still have the upper hand, with the RSI and CMF indicating a bearish market structure.