Journalist
Posted:
- Polygon has a clear bullish bias on the higher time frame price charts.
- Statistics indicated that a retracement was likely.
Polygon [MATIC] witnessed a steady uptrend in recent weeks after retesting the low in the 100-day range at $0.72. The recent move past the $0.9 resistance zone was impressive for several reasons.
The first and most important was the bulls’ renewed attempt to take control of the $1 level. This level has long been a key level, both technically and psychologically. This time, the buyers may have the strength to hold on.
Insight into the order block, the imbalance and the breakout of the OBV
Source: MATIC/USDT on TradingView
The range (purple) extended from $0.72 to $0.927, with an average value of $0.821. The bearish breaker block on the one-day chart was highlighted in cyan at the $0.9 zone.
At the end of December 2023, this order block was broken and the range highs appeared to be reversed in support.
But on January 3, MATIC prices plunged south along with the rest of the crypto market. This created a large gap in the fair value, delineated by the white box.
This region largely coincided with the bearish order block, marking it as a firm resistance zone.
On January 11, MATIC rose into this region, but the bulls were rejected. In the second half of January the token trend was downward, but in the past three weeks the lows in the range have been defended.
This time, however, the OBV has managed to break the key resistance that has been bothering buyers since January. Therefore, a rally towards HTF resistance at $1.19 and above was likely.
The previous series formation in October saw an outbreak that did not stop or return significantly. It was also accompanied by a rapidly increasing OBV.
The bulls would be monitoring the current breakout, hoping for a repeat of the previous one.
The dormant circulation peak is a cause for concern
Source: Santiment
The MVRV ratio moved higher due to the price gains and it reflected bullish sentiment as well as holders making profits. The supply on the stock exchanges has also risen higher in the past three weeks.
Together they suggested that selling pressure from profit-taking could quickly build and depress MATIC prices.
More importantly, dormant circulation saw a notable spike. In the past, this preceded large price dumps. Examples of this are the peaks of the statistics on December 26 and January 10 and 19.
All three were followed by a dump or a continuation of the downtrend before the January 19 peak.
How much is 1, 10 or 100 MATIC worth today?
Not every increase in dormant circulation is guaranteed to be followed by a price drop. However, the figures indicate that a short-term price drop was credible.
So bulls could wait for a retest of the $0.9-$1 region to re-enter long positions.
Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.