Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
- MATIC saw impressive development activity in Q3
- Negative Sentiment and Falling Open Interest (OI) Could Lead to a Price Correction
Polygon [MATIC] saw incredible growth in terms of development and partnerships in 2022. But, the blockchain also suffered two negative impacts from Terra Luna and the crash of FTX in 2022. As a result, MATIC rallied to $2, to fall at $1.5 and below $1 at the time of writing.
Read polygons [MATIC] price prediction 2023-2024
At press time, MATIC was trading at $0.8416 after a series of price corrections that broke new support. But MATIC’s long-term outlook might have an interesting picture to show.
Long-term EMA is moving sideways: will MATIC stay stuck in this range?
MATIC has been trading in a range since August. This was illustrated by the short-term exponential moving average (EMA) (blue line). The short-period EMA alternated between resistance and support several times between August and October. This underlined the impression that MATIC traded sideways during this period.
In particular, the 200-day EMA (orange) acted as resistance during the same time frame. MATIC only crossed it on November 3 and 10.
At press time, the 50-day EMA was in a downtrend, while the 200-day EMA was moving sideways. This indicated that MATIC might break new tests of new short-term support levels. However, in the long term (a few days or weeks), it could revert to trading within a range.
On-Balance Volume (OBV) supported the aforementioned trend. It has hit a series of lows, indicating lower volume and buying pressure. Additionally, the Relative Strength Index (RSI) was seen moving sideways below the neutral 50 level. This showed that the bulls were losing influence without giving the bears full control of the market.
Thus, the struggle between bulls and bears could bring MATIC into a range between $0.7739 and $0.9422. However, an intraday close above the 23.6% Fib level would invalidate the above bias.
MATIC’s open interest is steadily dwindling…
MATIC’s open interest increased steadily from October to early November. Since then, however, it has been steadily declining. This indicated lower inflows into the derivatives market and depicted a bearish outlook. A further drop in prices on the spot market was therefore likely.
Development activity has increased since the third quarter, but the negative sentiment remains
Data by Santiment supported the aforementioned bearish outlook for MATIC. The data showed negative sentiment despite a steady increase in development activity from the third quarter. Thus, the continuation of the price recovery could be hampered by the negative sentiment.
Where does MATIC go from here
MATIC’s price performance was more than just dependent on metrics. It lost its value by $0.82 after BTC lost $16.20,000, proving BTC’s influence on the altcoin. So, does MATIC offer long term trading opportunities?
No. Both EMAs were important resistances, and the negative sentiment and falling OI did not support such an inclination.
Are there short selling opportunities? Yes, possible in the short term, with $0.7739 and $0.7153 as new supports. However, in the long term, MATIC might trend sideways, and observing the general sentiment and performance of BTC might provide better price direction.