• Polygon (MATIC) is trading at $0.63, its lowest since October 2023, and is facing strong bearish sentiment with key momentum indicators suggesting it is oversold.
  • If the bearish trend continues, MATIC could break below this support level, but a shift in sentiment might lead to a rally towards $0.67.

MATIC’s Struggle in the Horizontal Channel

Polygon (MATIC), the native token of the renowned Layer 2 platform Polygon, has experienced a notable decline, shedding 10% of its value in the past week. Currently, MATIC is teetering near the lower boundary of its horizontal channel, trading at $0.63, a level not seen since October 2023. This channel, established since April 13, has seen MATIC oscillate between a support level of $0.64 and a resistance level of $0.75.

The formation of this horizontal channel indicates a phase of consolidation, where buying and selling pressures are relatively balanced, preventing a strong trend in either direction. However, MATIC’s recent movement towards the lower line of this channel suggests an increase in bearish sentiment.

Indicators Point to Bearish Sentiment

The negative sentiment surrounding MATIC has been corroborated by its on-chain weighted sentiment, which currently stands at -0.64. This metric, which measures the overall positive or negative sentiment toward an asset by tracking mentions and their volume, indicates a predominant bearish bias. This negative sentiment is further supported by the decline in MATIC’s futures open interest, which has dropped by 8% since the beginning of June to $197 million.

The declining futures open interest signals that more traders are closing their positions without opening new ones, reinforcing the bearish outlook. Additionally, key momentum indicators like the Relative Strength Index (RSI) and Money Flow Index (MFI) paint a concerning picture. MATIC’s RSI is at 36.44, and its MFI is at 26.11, both suggesting that the token is oversold, with weakening buying pressure.

Potential Scenarios for MATIC

The current state of MATIC reflects a precarious balance. If the bearish momentum continues, MATIC could break below the critical support level of $0.63, potentially recording new lows not seen in over eight months. On the other hand, if the bulls manage to defend this support level and sentiment shifts positively, MATIC could rally to $0.67 and move towards the upper boundary of its horizontal channel.

In conclusion, while the indicators currently point to a bearish outlook for MATIC, the possibility of a rebound exists if market sentiment improves. Traders should closely monitor these support and resistance levels and the overall market sentiment to make informed decisions.

By vivian

Vivian Njoroge is a seasoned crypto and blockchain news writer with a passion for decoding the complexities of the digital financial world. Armed with a keen eye for emerging trends and a knack for simplifying intricate concepts, Vivian brings a unique blend of expertise and enthusiasm to her writing. Her articles, characterized by clarity and depth, aim to keep readers abreast of the ever-evolving landscape of cryptocurrencies and blockchain technology.