Major corrections in May and June put MATIC price squarely under the 50-day EMA and the situation remains choppy and murky. MATIC is printing a modest declining wedge while volume continues to slump. Our understanding of declining wedges dictates that we expect price to break down below the wedge on low volume as price exits to the right.
The strong rally in May that took price over $2.50 produced a powerful enough movement to make the argument that MATIC remains in a bull market. In a bull market, we would expect a stronger bounce off points of resistance but all we have is continued chop. And this is consistent with the rest of the market. What we see on MATIC, if we want to look with optimistic eyes, is the formation of a vague W, which would print across the 50EMA on the 1D chart.
As you can see, it's a difficult argument to make, you have to be optimistic.
On the other hand, drilling down to the 1H chart and you can see just how tight the trading channel is right now.
The declining volume over the last couple days has to be of some concern for bulls as we continue to trade in a tight band between 1.02 and 1.07. We've seen strong support just above $1 since May when MATIC first topped $1. A lot of MATIC was traded well over current price, the longer term volume charts above make that stick out like a sore thumb and so a whole lot of liquidity is trapped significantly above current price.
MATIC continues to seek a catalyst to help it stand out in a crowded marketplace but price action is consistent with Ethereum and Bitcoin. The majors remain dominant kings. However, network statistics remain strong at current price of $1.04. The market cap is $6.6 B and there are 7.4 million transactions on the network daily. With over 660,000 wallet addresses, $1.7 B is currently staked. More than 350 dApps exist on the network. Standard gas fees average $ 0.0000000028.
The network recently announced that TrusWallet and MyEtherWallet have added Polygon to their platforms. With gas fees on the network increasing with the rising price of MATIC, it remains far below Ethereum's average Standard gas fees. However, complaints that the customer service department at Polygon is slow and unresponsive have been piling up. As networks grow they will inevitably face these sorts of growing pains. We'll continue to monitor the customer service situation as Ethereum 2.0 is still a ways off. Polygon bears will not hesitate to argue that Polygon is a band-aid for a healing wound and that fast network speeds will not be enough, the user experience is fundamental to their opportunity for long-term success. The alternative? A one-hit wonder that shot to stardom in May 2021.
To demonstrate that she remains in a bull market, price should use the support found just above $1 to bounce and test $1.27 or the .618 Fib line. Behavior at $1.27 will reveal MATIC's next move. However, failure to bounce due to poor volume threatens to break price down below $1 in search of $0.86 at the .786 Fib. Further break down would lead to a strong wall of resistance at $0.74.
Oscillators indicate RSI at 40.72 on the daily. MACD remains flat. Bulls are looking for volume to come into the market while bears point to flat or declining volume. However, MATIC does have a bit of room to run should a strong catalyst be introduced to the market.
Happy trading!
