MATIC: The how and why of what needs to be done before a trend change happens

Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice

After a steady rally to its ATH on December 27, MATIC fell sharply by breaching some critical price points and converting them into resistance.

Now, a sustained close above the $1.4 zone would set the stage for a patterned breakout. Unfortunately, a close below the trendline resistance (white) would reconfirm the bearish divergence with its RSI. This would push MATIC back in its pattern oscillation.

As of going to press, MATIC was trading at $1,465, up 3.34% in the last 24 hours.

MATIC 4 Hour Chart

Source: TradingView, MATIC/USDT

From its ATH of $2.92, MATIC fell to see a drop of 57.39%, reaching a four-month low on Feb. 24. But the bulls entered the USD 1.2 mark and propelled a rally to its trendline resistance (yellow, dashed). This resistance also coincided with the 50% Fibonacci level.

Following this, the bears started a down-channel rally under their Point of Control (POC). While the USD 1.3 support remained solid, MATIC bulls have started a strong recovery in the past 24 hours. As they went to press, they saw an overthrow of the existing pattern.

As of now, a convincing close above $1.47 would provide opportunities for a test of the 38.2% Fibonacci resistance. Overcoming the immediate trendline resistance is critical to a rampant near-term recovery. A close below the trendline resistance (white) could lead to a retest of $1.3 before a bullish comeback.

Also, a close above this POC in recent months has led to a recovery towards the USD 1.5 level. Can it repeat history?

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Source: TradingView, MATIC/USDT

The RSI showed an impressive recovery from its oversold territory. Now that it sees a challenge to its equilibrium, a close below its resistance would confirm a hidden bearish divergence.

Also, the OBV has maintained its peaks reasonably well, while the price has continued to fall over the past two days. This would confirm the build-up of increasing buying influence.

Conclusion

Given the upward trend in RSI and OBV, the chances of recovery from this point remain high. Still, any close below the resistance would confirm the hidden bearish divergence.

The investors/traders should keep a close eye on Bitcoin’s movement as MATIC shares a whopping 90% 30-day correlation with the king coin.

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