- MATIC price dropped to a support level at $1.352 as the crypto markets faltered on Monday.
- A reversal seems to be in the works, but transaction data hints at a continuation of the downtrend.
- Polygon will likely restart the uptrend if it produces a decisive close above $1.728.
MATIC price suffered a setback as it sliced through the equilibrium point and continued its descent. A bounce from the immediate support seems to have originated, but the chances of a down move are still present.
MATIC price drops below key level, bulls try to reverse action
MATIC price dropped below the 50% Fibonacci retracement level at $1.588 on Monday after teetering above it for a long time. This sell-off was part of a larger move that pushed the entire market lower.
As Bitcoin and other altcoins recover, Polygon price also shows signs of an uptrend. So far, MATIC has rallied 8% and hints at a continuation of the upswing. A decisive 4-hour candlestick close above the 50% Fibonacci retracement level at $1.588 will confirm the start of recovery.
However, a rejection at these levels could reignite the sell-off, sending Polygon spiraling.
If this were to happen, MATIC price would slice through the immediate support barrier at $1.352, followed by $1.229 and $1.
In extremely bearish conditions, Polygon could retest the range low at $0.745.
MATIC/USDT 4-hour chart
While the upswing might pose as a reversal sign, rejection at $1.588 or a fakeout above it could trap unbeknownst investors. Therefore, market participants need to exercise caution.
Polygon on-chain metrics show difficult path for bulls
Adding credence to the risky upswing narrative is IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model, which shows large clusters of underwater investors present above the current position, $1.469.
Roughly 3,450 addresses that purchased nearly 109 million MATIC at an average price of $1.59 are “Out of the Money.” Hence, any short-term spike in buying pressure will most likely face selling pressure from investors who might want to break even.
Only 204 addresses that purchased 64 million MATIC at $1.46 are present as support levels. Therefore, it is likely that a momentary spike in selling pressure will easily topple the demand barriers.
MATIC IOMAP chart
On the other hand, if MATIC price produces a decisive 4-hour candlestick close above $1.728, it will invalidate the bearish thesis and invoke a 13% rally to $1.944.
Breaching this level could push Polygon to $2.26.
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