Polygon MATIC has been on a consolidation streak for roughly a week. This range-bound movement suggests that there was no imbalance between demand and supply. However, these lateral moves are usually followed by an explosive price action that could head either way.
Polygon rallied from a price of $0.745 to $2.438 between May 23 and May 26, setting up a range for future purposes. Since then, this leg-up MATIC has been contained within it, albeit in a slow downtrend.
Typically, a bounce from the 50% Fibonacci retracement level is likely in a bull trending market. However, in some cases, the asset goes lower, i.e., a higher discount, which will provide a good buying opportunity. The same holds for MATIC.
Therefore, MATIC could rise above the price of $1.592, signaling increased buying pressure. In this case, a 15% ascent will put MATIC at $1.825.
If the momentum continues, the bulls could target a price of $1.972, and in an optimistic case, $2.206, which is roughly 27% from the current point, $1.561.
On the flip side, investors should note that a bounce from the 70.5% Fibonacci retracement support level at $1.244 is also plausible, with the Polygon upside targets remaining the same.
Supporting this Polygon bullish thesis is IntoTheBlock’s Global In/Out of the Money model, which shows a small cluster of underwater investors present at a price of $2.13. Here, roughly 9,400 addresses that purchased nearly 100 million Polygon MATIC are “Out of the Money.”
Therefore, the Matic bull rally might face downward pressure from these holders who might want to break even.
While the confirmation of the upswing will arrive after MATIC's price closes above the price of $1.972, a premature rejection could hurt the bullish case.
Interestingly, the IOMAP chart shows that Polygon MATIC is currently sitting at a point where 733,000 tokens are being held by roughly 36,000 addresses, whose average buying price is $1.72. Therefore, losing this support level will put a large portion of these market participants underwater and might trigger a selling pressure, pushing MATIC's price lower.
In contrast, the support level cluster below $1.72 is relatively small; roughly 1,650 addresses are holding 24.67 million Polygon MATIC here and might not be able to withstand the selling pressure.
In light of these events, a breakdown of $1.244 followed by extended trading below this support level could invalidate the bullish hypothesis explained above.
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