MATIC Price Prediction: Polygon price needs to hold this area to continue rallying in January

• Polygon price enters the consolidation phase as traders reassess the situation.
• MATIC needs bulls to hold the area above $0.96.
• With a big risk event, the big test comes for this rally and its sustainability.

Polygon (MATIC) price is set to face an important moment as a one-off event is set to unfold overnight on Wednesday morning in the ASIA PAC trading session. The market is buzzing with rumors that the Bank of Japan could throw its decade-long monetary policy in the bin and let loose its yield curve control that has cost billions in US Dollars. This will be a big test to see whether markets are strong enough to absorb this possible binary risk event and contain any losses, not to break overall sentiment.

MATIC price rally faces its first real test

Polygon price has been rallying substantially and almost continuously since the start of 2023 with a staggering 35% gain on the quote board. For the first time this month, a consolidation phase is underway as the price sees lower highs and higher lows. That is no coincidence, as the Relative Strength Index (RSI) is trading far away in overbought territory, and a big one-off risk event is scheduled to happen in early ASIA PAC trading on Wednesday. 

MATIC price thus sees its rally being tested for the first time as this risk event could rattle markets in every corner and every asset class. The Bank of Japan could be set to end its yield curve control, a monetary approach used for almost a decade in an environment where growth and inflation were both subdued. With inflation rising and growth lacking, this policy does not come in handy anymore, and this sudden change could trigger a massive risk-off moment. 

Translated into MATIC movements on the chart, $0.96 must withhold any selling pressure. The level was already tested for support on last Sunday and triggered a higher bounce after bulls pierced through it the day before. With that, the viability of the rally gets proven and will see a 23% rally toward $1.18 as the negative impact of this event will start to abate quite quickly into the trading week and over the weekend.

MATIC/USD daily chart

Risk in this binary event is similar to its binary reaction on that mentioned support level near $0.96. If bears are overpowering bulls so much that they can break and close that support level below, expect bulls to trigger a selling cycle as they scramble to get out of the position with the little gains they still have. Another dip toward $0.85 is granted as both the 55-day Simple Moving Average (SMA) and the 200-day SMA are aligned to halt any falling knives.

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