The MATIC price is constrained between the support of the 200-day moving average and the resistance of a descending trend line, and sooner or later, one will give out, which could lead to fireworks. For now, the bulls are doing an excellent job of defending the critical moving average.
Polygon (MATIC) has traded below the 200 DMA four times in the last seven days, always managing to finish the day above the indicator. The previous time MATIC closed below the 200-day was in January at $0.019, highlighting how remarkable 2021 has been for Polygon.
The daily chart shows that after setting an all-time high of $2.900 in May, the MATIC price entered a bear market. By July, Polygon was 78% lower and beneath the 200 DMA at $0.657. However, crucially, MATIC finished the day at $0.689, triggering the second bull market of 2021. Within two months Polygon was 190% higher, topping out at $1.875 on the 5th of September. Since then, the price has been heading lower, resulting in a descending trendline, capping the price at $1.120.
The 200-day moving average sits at $1.066, countering the trend resistance. If the MATIC price closes below $1.066, I expect to see a sharp decline. A logical target is the horizontal support of July’s $0.620 low, which coincidentally was the last visit to the 200 DMA. However, if Polygon clears trend resistance at $1.120, it would indicate the 200-day has done its job again. In that event, the bulls will be encouraged, and the MATIC price should quickly clear the 100 DMA at $1.201 and extend towards the September high.
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