Polygon (MATIC) is currently trading at a critical level, which may determine its long-term trend. As the native token of the popular Polygon network, MATIC helps to reduce transaction costs and speed up transactions using sidechains.
These sidechains operate independently but are connected to the Ethereum main network, making it easier to transfer decentralized applications. Technical analysis of the daily chart indicates that the MATIC price formed a bullish hammer candlestick pattern on March 10 and has been rising since then.
This allowed the price to recover above the Fibo support level of 0.618 correction by $1.07 and form a maximum of $1.25 on March 18. Although the token rolled back to the $1.07 support area, this decline may be a retest of the previously broken level.
The daily RSI is hovering around 50, indicating a neutral trend. Therefore, the direction of the further MATIC trend may depend on how the price behaves in this area. A higher low could extend the rally towards this year’s high of $1.57, while a bearish breakout could drop the token to $0.93.
Since June 2022, the MATIC price has appreciated by 394%, but this growth has taken place inside an ascending parallel channel, usually associated with corrective structures. The channel support line coincides with the low of March 10, and a bearish breakout of the channel could neutralize the bullish structure and lead to a drop to the 2022 low by $0.31.
On the other hand, if MATIC forms a rising low and moves above the channel’s midline, the bearish outlook will be canceled, and the market may head towards the channel resistance line at $1.70.
Looking at the weekly timeframe, the rise appears to be part of a relief rally relative to the previous bearish move, highlighted on the chart, that began after the price reached a historical maximum. The rally tested the long-term Fibo 0.5 retracement level, and a new decline should be expected soon.
In summary, the direction of Polygon’s further trend will depend on whether the price makes a higher low or engulfs the March 10 low. A higher low could extend the rally towards $1.61 or more, while engulfing the March 10 low may cause the price to sink to the area of $0.30.