MATIC Price Forecast: Polygon Standoff Between Bulls And Bears On Course Above $1

Last Updated August 4th 2021
2 Min Read
  • MATIC price holds above $1 as the tug of war between the bears and the bulls intensifies.
  • The technical outlook shows that the seller could carry the day as Polygon drops under $1.
  • The IOMAP on-chain metric by IntoTheBlock affirms that the consolidation period is far from over.
  • Declining network growth suggests that Polygon could end up in losses.

Polygon assumed consolidation following an impressive rally from levels around $0.62. The recovery made it above $1, but bulls ran out of momentum to sustain the uptrend above $1.1. Soon after, a correction came into play with MATIC retesting support at $1.

The 200 Simple Moving Average (SMA) on the four-four chart reinforced the support at $1, ensuring losses were barred from extending further. However, the smart contract upside has since been capped under the 50 SMA.

MATIC is trading at $1.012 amid a seemingly equal fight between the bulls and the bears at writing. As long as the price remains pivotal between the support and resistance mentioned, we expect consolidation to keep dominating.

Why MATIC Price Sideways Action May Culminate In Losses

First, the Moving Average Convergence Divergence (MACD) has a minor sell signal in the four-hour timeframe. The call to investors to offload their bags appeared at the beginning of the month, following the correction from highs marginally above $1.1. As the 12-day EMA crossed under the 26-day EMA, the odds for a bearish outlook increased. Note that a break under the mean line may trigger more losses below $1.

Secondly, the Relative Strength Index (RSI) has dropped in the lower band of the neutral area after the rejection from the overbought region on July 26. Since the RSI is not oversold yet, sellers still have room to explore the downside. Hence, the chances of another correction are high.

MATIC/USD four-hour chart

 MATIC/USD four hour chart

Santiment's Network growth model shows that the number of new addresses created on the Polygon protocol topped out on May 18 at a high of 8,190 addresses per day, calculated on a 3-month trailing average. Since then, MATIC's network growth has declined by new active addresses per day. There have been several spikes from time to time, but they were all unstainable.

At the moment, only 1,855 new addresses have been created based on the same trailing average, which can be considered a significantly bearish signal for Polygon.

Polygon Network Growth Bearish Signal

 Polygon Network Growth Bearish Signal

The IOMAP model by IntoTheBlock reveals an immense resistance between $1.04 and $1.08, where 8,300 addresses previously bought 140 million MATIC. This robust resistance will likely keep the bulls' efforts at bay, preventing recovery to $1.1.

Polygon IOMAP Model

 Polygon IOMAP Model

On the downside, Polygon sits on top of relatively equal support areas. For instance, 3,700 addresses previously purchased 113 million MATIC around $1. If buying pressure at this area remains intact, Polygon will continue with the consolidation until the stalemate between the bulls and the bears' breaks.

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