Polygon MATIC: Recovery from Correction (TA 05/24/2021)

By JCRoemer | JCR's Crypto Musings | 24 May 2021


In early May, Polygon MATIC absolutely exploded with a 470% rally over a few weeks. Unfortunately, the expected retracement coincided with the Great Crypto Crash of May '21 and price descended to $1.04 before rebounding to over $2 only to plummet back to $0.75. 

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After arguing last week that we had reached the fifth and final Elliott wave with the pump to points over $2.50, an ABC correction played itself out so quickly with MATIC that it's difficult to believe it's the actual correction of the rally and instead, the asset simply is caught up in the larger price movements of the entire market. Either way, an ABC correction pattern played itself out and price is again moving above $1.50, quite the extension for a coin that was trading around $0.35 two months ago. However, quick to rise, quick to fall. And... quick to recover? Let's look...

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We recently discussed this expected retrace and pointed out that a drop to the .786 level or $0.73957 would be entirely within the "normal" order of operations, especially considering the speed at which MATIC raced from $0.35 to the ATH at $2.7984. Almost like clockwork, the market tested the .786 retrace. And while we could debate exactly where to pin the bottom of the A leg, whether we use the candle or the wicks, the pattern still holds. The market pinned the .5 Fib retrace 3 times before pinning the .618 retrace line and taking price back up on the B leg to the .236 retrace. The market makers know traders use Fibonacci levels so they take advantage of traders by playing with price in these ranges, as we see time and time again on crypto charts. 

Finally, on May 23, price bottoms out on the C leg to complete the correction and allow price to begin to move back up. We see confirmation of this with the bullish cross of the 50EMA cloud and then the bullish cross of the 200 EMA (white line). Holding support above the 200 EMA indicates MATIC is still enjoying a bull market. On the 1H, A rejection above the 200 EMA would imply that MATIC is heading into a bear market so we will be watching closing candles carefully while also watching for a bullish cross of the 50EMA above the 200EMA, signaling further action to the upside and calling for a look at the MACD on the 1D.

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Here again, encouraging signs that the Great Crypto Crash merely delayed the larger Polygon rally, which would fundamentally make sense as the project itself is in a solid position to stay relevant moving forward. We must continue to monitor the declining bearish divergence for confirmation of a continuing rally to the upside. 

At this point, we will look for MATIC to begin to test resistance at $1.86, the .382 retracement line. Continued momentum at this point will send price to challenge the $2.20 zone before making another run at the ATH. Rejection at either zone sends price back to the $1.50 range where further breakdown sends MATIC to around $1.28 to test support zones again. As the market continues to recover from sharp declines last week and over the weekend, traders should expect chop as resistance zones flip to support and price recovers. Watch for price to bounce between Fibonacci zones. If MATIC performs like other alts after a major rally, watch for the formation of a bullish declining wedge as price tests support and resistance between .382 and .786 retracement zones leading to a break out on rising volume or a breakdown on declining volume. At the time of this writing, MATIC volume remains relatively strong coming out of the crash. With it's recent move into the Crypto Top 20, MATIC is now looking to claim a seat among the Top 10 by outperforming on recovery. 

 

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JCRoemer
JCRoemer

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JCR's Crypto Musings
JCR's Crypto Musings

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