Crypto currency background with various of shiny silver and golden physical cryptocurrencies symbol coins, Bitcoin, Ethereum, Litecoin, zcash, ripple.
A dreadful start to the month has seen the Polygon price lose 38%. But now may be the right time to think about buying MATIC.
Polygon is last trading at $1.2350, -$0.0179 (–1.37%).
It’s fair to say that MATIC has had a rough couple of weeks. However, when we add some perspective, the Polygon price has had a fantastic 2021.
At the start of the year, Polygon was trading at $0.0169. By the 19th of May, it had gained over 15,000% to $2.8988. Of course, the whole market has been revalued lower over the last month, and MATIC has lost -57% from the peak.
Nonetheless, a 6500% return on investment is still mind blowing.
Clearly, not everybody has been holding since the start of the year, and the recent decline has left many newly-minted longs underwater on their positions. This has likely contributed to the magnitude of the latest sell-off.
Unquestionably, the Polygon price momentum is negative. However, there may be some signs that we are approaching an interim low.
The daily chart doesn’t paint a pretty picture. The price has broken (and closed) below the 50-day moving average for the first time since the early May bull run.
Secondly, the brutal drop between the 19th and 23rd of May saw huge volume. So it’s logical to assume the 4-day decline forced many longs out of their positions.
But, the volume was also high during the following relief rally between the 23rd and 26th of May. This suggests that no sooner than stopping out, longs were once again chasing MATIC higher.
Therefore, I would have expected to see liquidation when the price broke below 200 DMA at $1.3165. This never came. So maybe, the length is now in the stronger hands of long-term investors.
Below the market, a rising trend line from late April provides support at $1.0700. This is an important level. As long as the Polygon price doesn’t cross below this threshold, it might still recover.
The Stochastic RSI reading is on the floor. This shows just how poor the price action has been.
Now for the positives.
With the technicals as poor as they are. It wouldn’t take much for them to turn higher and throw off some bullish signals. the first of which, would be a close above the 50 DMA.
If the price can recover the average today, we can consider yesterday’s dip below a false breakout. This might encourage some upside momentum.
Above $1.5000, we could well be talking about $2.00 again. Having said that, the market does have to do some of the work. Meaning, for this to happen, we need to see some strength returning to the cryptocurrency space.
The asset class has been pretty unloved recently. Stocks are flying, and much of the retail participation has moved over to meme-stocks.
However, when crypto becomes popular again (hopefully sometime soon), MATIC could be a big over-achiever on the upside.
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