While Polygon (MATIC) has broken out from a long-term descending resistance line, it has yet to clear an important horizontal resistance which would confirm that a bullish reversal is in place.
On Tuesday, it was announced that Starbucks and Polygon will partner in a non-fungible token (NFT) loyalty program called “Starbucks Odyssey”. The program allows customers to purchase or earn digital assets, which in turn will unlock exclusive rewards and experiences.
The digital assets will be collectable stamps that are in the form of NFTs. The main goal of the program is to onboard the existing customer base into Web3.
Long-term resistance
The weekly chart shows that MATIC broke out from a descending resistance line in July 2022. The breakout was crucial, since the resistance line had previously been in place since the all-time high. So, breakouts from such long-term structures usually lead to sustained upward movements.
While the price has increased considerably, the weekly RSI has yet to break out from its bearish divergence trend line (green line).
This would be required in order for the bullish reversal to be confirmed. Moreover, this would also cause an RSI increase above 50.
If the upward movement continues, the closest resistance area would be at $1.31, created by the 0.382 Fib retracement resistance level and a horizontal resistance area.
Future MATIC movement
The daily chart shows that the price had been increasing alongside an ascending support line since June 18. The upward movement led to a high of $1.05 on Aug 14. However, the price was rejected by the minor $1 resistance area.
Afterward, MATIC broke down from the ascending support line that had been in place since the June lows. While the price has been increasing since, it is possible that the upward movement could be just a retest of the $1 area and the ascending support line.
If another drop follows, the 0.618 Fib retracement resistance level at $0.60 would be expected to provide support.
The RSI is freely moving above and below 50, failing to determine the direction of the trend.
Finally, the six-hour chart shows that MATIC is trading inside an ascending parallel channel and is currently facing resistance from the 0.618 Fib retracement resistance level at $0.94.
When combined with the bearish divergence in the RSI, this further supports the possibility that a short-term breakdown towards $0.60 could occur.
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