• Polygon is testing a fundamental level to the downside that could open up more losses, even to the extent of 20%.
  • Over the past three days, Polygon already had to book 43% of devaluation because of headwinds in cryptocurrencies. 
  • Buyers will need to wait before stepping in until price action stabilizes.

Polygon (MATIC) is in trouble, and yesterday's global rout in cryptocurrencies could not have come at a worse time. MATIC was already shedding some profit after the rally up on September 4. A failed attempt to jump toward $2 made buyers quickly take profit and opened the door for sellers to start fading into a short.

Price action in Polygon got squeezed against the green ascending trend line that acted as the backbone for the rally since July 20. The real break lower came after the rollout of Bitcoin as the reserve currency for El Salvador. Polygon shed almost 40% of its value in just one day, as cryptocurrencies rolled over across the board.

Polygon is a falling knife: do not dare catch it

More headaches ahead for investors of Polygon as today's price action got rejected around $1.40. That level falls in line with the orange long-term ascending trend line from March 22. With multiple retests on both upside and downsides, it has a proven track record.

MATIC/USD daily chart
 

MATIC/USD daily chart

The fact that buyers could not push price back above this orange ascending trend line spells more downside to come in MATIC price action. On the downside, the first level of interest appears at $1.20. Just above, around $1.25, the 55-day Simple Moving Average (SMA) comes in. Although that 55-day SMA looks attractive, it needs to prove that it has or holds some importance for MATIC.

For the patient investors, an excellent opportunity lies at $1, where Polygon has the S1 monthly support level falling in line with the 200-day SMA. These are two big forces. Especially the 200-day SMA, as that was the starting point for the rally on July 20 and might reenact its former glory. 




 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

US presidential election outcome could shape the future of crypto

US presidential election outcome could shape the future of crypto

US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).

More Cryptocurrencies News
Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs beat Gold ETFs with 65% gain since launch

Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.

More Bitcoin News
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand

Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.

More Ripple News
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF

Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.

More Ethereum News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP