A “layer 2” scaling solution or sidechain called Polygon (MATIC) was created to give customers faster transactions and cheaper prices on the Ethereum blockchain. At the time of writing, the token is priced at $0.4797. Despite the downtrend it went through in recent days, Polygon (MATIC) was able to excite its investors with its technical structure.
There has been a price decline that has been going on for a while, and many investors were going through a loss. However, the bullish chart formed on the $POL chart has given hope for an increase. The Bull Flag Pattern is a bullish continuation pattern characterized by a sharp increase in price (the flagpole) followed by a consolidation period (the flag).
There might be strong buying pressure in the market, and the traders are only taking a break before continuing to push the price too high; as a result, it is considered bullish. Before delving into the Polygon Bull Flag, first, let’s understand what a polygon is and what the bull flag pattern means.
What is a Polygon (POL)?
Polygon (POL) is a layer 2 solution operating on the Ethereum blockchain designed to allow the development of applications for various purposes. It has its own token named POL (formerly known as MATIC), which is used to govern and secure the network and also for fee payment of transactions. Polygon uses a proof-of-stake validation mechanism, and the successful validators in the network are rewarded with POL.
Current position of Polygon in the crypto market
The supply of Polygon on exchanges has decreased while its supply outside the exchanges has increased. At the time of writing, the token is priced at $0.4797 with a market cap of $918.98 M. This value shows a slight decrease in the price over the last 24 hours and a significant decline over the last week.
Despite this decline in prices, Polygon (POL) continues to be an important player in the cryptocurrency world since it is known for supporting Ethereum and enabling affordable and faster transactions on the blockchain.
By offering solutions to some of the scalability challenges in Ethereum, Polygon has captured significant attention within the blockchain ecosystem. Polygon has positioned itself as a key player in the crypto market by providing a platform for developers to build and use decentralized applications.
The increase in Bitcoin’s prominence or negative news from the Polygon ecosystem may pull down the price naturally. In such a situation, the first reaction can be expected from the lower band of the triangle, followed by support from other bands as well. As the crypto market is subject to volatility, it is important to keep an eye on the market conditions and monitor on-chain data.
MACD and MFI
- The Moving Average Convergence Divergence (MACD) is a technical indicator to help investors identify price trends, entry points for buying and selling, and measuring trend momentum. The MACD bars are turning green, indicating increased buying activity, and if the MACD line crosses the signal line, then it will be a confirmation of a short-term bullish trend.
- The Money Flow Index (MFI) is a technical indicator that uses price and volume data for identifying overbought or oversold signals in a digital asset. MFI has increased to 62, indicating increased buying pressure.
dApp activity and DeFi’s role
- There has been an 8% drop in Polygon’s 7-day dApp volume and also a 10% drop in unique active wallets (UAWs).
- On the other hand, Polygon’s Decentralized Finance (DeFi) landscape is bouncing back with the Total Value Locked (TVL) rising to $1.195 million, the highest level over a month.
Key levels to watch
- The In/Out of the Money Around Price (IOMAP) from InToTheBlock demonstrates that almost 10,000 addresses bought Polygon between a price of $0.65 and $0.67. This price zone could act as a support level if the price drops below it.
- On the other hand, more than 31 million POL tokens have been bought between a price of $0.67 and $0.69 by 10,270 addresses. If the price breaks above $0.70, then there could be selling pressure from these addresses.
Long or short ratios
The long/short ratio of Polygon dropped to a monthly low of 0.70 on 9th December 2024, but as of now, it has risen to 0.90. But POL’s long/short ratio still shows bearish movement with 52% of traders being short sellers.
Conclusion
Polygon’s Bull Flag represents both an opportunity and risk for buyers. Although the pattern suggests that there are chances of a continuous bullish trend, it is important to note that, like any other technical indicator, it is not a dependable indicator as it can fluctuate. Buyers should remain cautious and closely monitor the market trends, trade volume, and other indicators to make sound decisions.
If there is a breakout above the flag’s resistance level, there could be gains, but a failure in the same could result in a loss or consolidation. So, as always, one should conduct thorough market research and risk tolerance analysis before making investment decisions.