At one point yesterday, the MATIC price had erased all of August’s gains and was down more than 40% from Sunday’s three-month high. However, the bulls were given a glimmer of hope when Polygon (MATIC/USD)(reversed from the 200-day moving average, paring the one-day loss to 17%.
Tuesday, was a brutal day for cryptocurrency traders. The market suffered huge losses in what resembled a ‘flash crash’ reminiscent of May’s historic bloodbath. However, investors will be hoping that, unlike in May, the market recovers. And to be fair, there are some signs this could happen. Bitcoin (BTC/USD) and Ethereum (ETH/USD) staged a strong recovery, reclaiming key technical levels. However, the market is vulnerable to another meltdown.
The first thing evident on the daily chart is that the MATIC price has fallen out of its uptrend. The former trend support at $1.3980 now combines with the 50-day moving at $1.3493 to create strong overhead resistance. This should be considered the first obstacle to the path higher. As long as the price remains below $1.3493, it may succumb to further weakness.
Targets on the downside include the 100-day average at $1.2290, and following that, the 200 DMA at $0.9900 is the must-hold level for the bulls. If the MATIC price fails to stay above the 200 DMA, a return to the July low of around $0.6200 looks probable.
However, if Polygon recovers the former trend support at $1.3980, the bearish outlook is reversed. In this event, the uptrend can resume and potentially target trend resistance at $1.7580 once again.
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