Polygon (MATIC) is trying to make a bearish breakout from its long-term price structure. This jeopardizes all the growth seen since the beginning of this year.
The daily timeframe is also giving bearish signals. As a consequence, the MATIC course needs an urgent bullish reversal to neutralize the bearish trend.
Polygon can fall out of the bullish structure
MATIC is the native token of the Polygon network, a popular second-level scaling solution for the Ethereum blockchain. It helps reduce cost and speed up transactions with sidechains.
These are separate blockchains that operate independently of Ethereum, but are connected to the main network.
Polygon also helps move decentralized applications (dApps) to a connected blockchain system.
As the results of technical analysis of the weekly chart show, the prospects for MATIC are bearish. First, the price is trading inside an ascending parallel channel.
This pattern is considered corrective, so its northward direction suggests that the broader trend of the currency is bearish and eventually the price will make a breakout to the south from this channel.
In addition, MATIC is trading in the lower part of this channel, which further increases the probability of a bearish breakout.
In addition, MATIC is trading in the lower part of this channel, which further increases the probability of a bearish breakout.
Second, the weekly Relative Strength Index (RSI) is showing a bearish mood as it broke its trend line and dipped below the 50.
This index is a momentum indicator, indicating the overbought/oversold market, depending on whether it is above or below the 50 mark.
In the case of Polygon, it indicates a bearish trend and together with the decline in price it increases the chances of a bearish breakout.
The nearest support is at $0.76 and the nearest resistance is represented by the midline of the channel at $1.40.
Does MATIC have any strength left
The results of the analysis of the daily chart also confirm the signals of the weekly timeframe.
Although the price rebounded from the $0.95 horizontal support area, it is still moving along a short-term downtrend resistance line.
Together with the support area, this line forms a descending triangle, which is considered a bearish pattern.
As a consequence, a bearish breakout seems to be the most likely scenario. In this case, the price could fall to $0.76.
On the other hand, growth of MATIC above the resistance level and recovery above the support line of the previous channel will be a signal of a bullish trend.
In this case the market can aim at the midline of the channel at $1.40.