Polygon (MATIC) shows bullish momentum as it approaches the $1 resistance zone, with potential for further gains. Analysis includes price trends, resistance levels, and indicators.
"Following a consistent upward trajectory in recent weeks, Polygon (MATIC) experienced a positive trend after testing its 100-day range lows at $0.72. The recent breakthrough above the $0.9 resistance zone marked a significant achievement for various reasons.
One notable factor was the renewed effort by bulls to establish dominance at the crucial $1 level, a level that holds both technical and psychological significance. This time around, buyers appear to have the strength to maintain control.
The range, depicted in purple, ranged from $0.72 to $0.927, with the midpoint at $0.821. The bearish breaker block on the one-day chart, highlighted in cyan at the $0.9 zone, was a key feature.
In late December 2023, this order block was breached, and the range highs seemed to transform into a support zone.
However, on the 3rd of January, MATIC prices experienced a downward movement alongside the broader crypto market, leaving behind a substantial fair value gap, outlined by the white box.
This area coincided largely with the bearish order block, establishing it as a formidable resistance zone.
On the 11th of January, MATIC approached this region, but the bulls faced resistance. The latter part of January witnessed a downward trend, yet the past three weeks saw a defense of the range lows.
This time, the On-Balance Volume (OBV) has successfully surpassed the key resistance that has been a challenge for buyers since January. As a result, a potential rally towards the higher time frame (HTF) resistance at $1.19 and beyond appears likely.
The previous range breakout in October showed no significant pauses or retracements, accompanied by a rapidly rising OBV.
Bulls are closely monitoring the current breakout, anticipating a repeat of the previous bullish scenario.
The MVRV ratio has surged due to price gains, reflecting bullish sentiment and profitable holdings. Exchange-held supply has also increased over the past three weeks.
Collectively, these factors indicate a potential selling pressure from profit-taking, which could lead to a temporary dip in MATIC prices.
Of particular note, dormant circulation has seen a notable spike. Historically, such spikes preceded significant price downturns, as seen in examples like the spikes on the 26th of December and the 10th and 19th of January.
All three instances were followed by either a market dump or a continuation of the downtrend in the case of the spike on the 19th of January.
While not every surge in dormant circulation guarantees a subsequent price dip, the metrics suggest a credible possibility of a short-term downward movement.
Therefore, bulls might consider waiting for a retest of the $0.9-$1 region before re-entering long positions.
Disclaimer: The information provided is the author's opinion and does not constitute financial, investment, trading, or any other form of advice.
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