Polygon (MATIC) price is at a risk of breaking the $0.78 horizontal support area, which could lead to a decline towards $0.60.
Polygon is a layer-2 scaling solution for the Ethereum blockchain. This effectively turns the Ethereum network into the Internet of Blockchains and improves its capabilities related to smart contracts and decentralized applications.
MATIC price broke the ascending support line and is now at a risk of breaking above the horizontal support area. If this happens, it could catalyze a reduction of 22%.
Matic breaks down from key support
MATIC price has declined since reaching a high of $1.30 on 5 November. Initially, the price bounced off an ascending support line (green icon), triggering a short-term rally. However, it broke above the line on December 16 and validated it as resistance the next day.
Currently, Polygon price is trading well above the $0.78 horizontal support area. This is an important area as it has previously acted as support since late July. As a result, a possible breakdown below it could accelerate the rate of decline.
The daily RSI is bearish, favoring a breakdown. This is because it is declining and has moved below the 50 line. Therefore, the most likely MATIC token price move is a break towards the $0.60 area. From the current price, it is a fall of 22%.
Conversely, retesting the ascending support line indicates that the trend is bullish instead.
Short term rally on the horizon?
Despite bearish readings from the daily time frame, the shorter-term six-hour chart indicates that an initial MATIC price rally is expected before a decline. MATIC Network price broke a descending resistance line after the RSI generated a bullish divergence (green line). Although it has not started a rally yet, it has validated the resistance line as support 24 hours after the breakout.
If the upward move continues, there is likely to be resistance at $0.82-$0.85 formed by the 0.382-0.5 Fibonacci retracement resistance area. This will also coincide with a long term resistance on the daily time frame. A decline is expected later. However, retesting the area could mean that the trend is bullish.
To conclude, MATIC is reading bearish on the daily time frame, supporting a decline to $0.60. However, there is actually an initial short term upside potential towards $0.82-$0.85 before a decline. Retracing this area indicates that the trend is bullish instead.
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