Polygon (MATIC) price broke out from the 140-day resistance line but did not follow the breakout with a significant upward move.
The long and short term readings do not agree with each other. While the daily time frame is showing a decisive breakout, the short term outlook is for a breakdown instead.
The price breaks the polygon from the 140-day resistance
The technical analysis of the daily time frame of MATIC is giving a bullish outlook. The main reason for this is the fact that the price has broken out of the descending resistance line that has been present for 140 days.
A breakout from these long-term levels means that the previous movement has taken place, and a new movement has started in the other direction.
Despite the breakout, MATIC has now started a significant upward movement. Instead, it is trading near the pre-breakout level.
The weekly relative strength index (RSI) is also bullish, which legitimizes the breakout. Using the RSI as a momentum indicator, traders can determine whether the market is overbought or oversold and decide whether to accumulate or sell an asset.
Bulls have an advantage if the RSI reading is above 50 and the trend is bullish, but if the reading is below 50 the opposite is true. The RSI is below 50 (red icon) and declining, indicating a downtrend.
The indicator moved above 50 when the price broke through the line. Therefore, it supports the possibility that MATIC price will start a new bullish trend.
MATIC PRICE FORECAST: The key level determines the direction of the trend
While the daily time frame is decisively bullish, the short-term six-hour time frame casts some doubt on the legitimacy of the previous breakout.
While MATIC price has been rising since June 10, it has done so within an upward parallel channel. This is considered a bearish pattern, which means that an eventual breakdown is likely from it.
Moreover, MATIC price was rejected by the confluence of resistance levels (red circle) on July 12th. The channel resistance line and the 0.5 Fibonacci retracement resistance level create resistance.
The principle behind Fibonacci retracement levels suggests that after a significant price move in one direction, the price will partially return to the previous price level. So, the failure to move above 0.5 Fibonacci levels indicates that the upward movement is corrective, and a breakdown will occur.
If MATIC price breaks out of the channel, it is likely to drop to the June 10 low at $0.51.
Despite this bearish short-term prediction for MATIC price, a breakout from the $0.74 resistance area and the channel would mean the trend is to the upside. MATIC price could move to the nearest resistance at $0.90 in this case.
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Disclaimer
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.
