Polygon targets record as MATIC's 150% price hike activates textbook uptrend

A recent price rally in Polygon’s native MATIC token market pushed prices above $ 1.56 for the first time in more than two months. The M...

A recent price rally in Polygon’s native MATIC token market pushed prices above $ 1.56 for the first time in more than two months.

The MATIC / USDT exchange rate rose 20.65% in just two days to regain its June 17th high. Traders increased their bids for the pair after Polygon announced it would create a decentralized autonomous organization (DAO) for members of his community while focusing specifically on the burgeoning decentralized finance (DeFi) space.

Polygon, which offers layer two scaling solutions for Ethereum projects, has allocated $ 100 million for the creation of DAO – and also for integrate DeFi projects into its interoperability pool. The team also announced that it will be dropping new DAO governance tokens to existing Polygon users, i.e. free tokens for people who own MATIC.

Strong intermediate fundamentals have pushed demand for MATIC higher among speculators, causing prices to rebound in the past two days. Meanwhile, the bullish movement has also activated a classic bullish pattern that could send MATIC prices to a new high.

Expected breakout

Nicknamed “head and shoulders reversed“, the pattern is a common bullish reversal indicator that appears after price hits three consecutive lows below a resistance-type neckline. In doing so, the middle (head) low appears to be deeper than the other two ( shoulders), which are more or less the same height when measured from the neckline.

Technical chartists generally enter a long position when the price crosses above the neck line, the maximum pattern height plus the breakout level serves as the ultimate profit target. Their stop loss is usually at the low point of the right shoulder.

Applying the textbook definitions to the MATIC / USDT three-day chart shows that the pair is forming an inverted head-and-shoulder pattern.

Three-day polygon chart (MATIC / USDT) with the head and shoulders pattern reversed. Source: TradingView

On August 20, Polygon token broke above $ 1.51 neckline resistance following a 150% price rally measured from the June 18 low of 0. $ 62 (the head). Therefore, the maximum height of the inverted head and shoulders pattern is $ 0.89.

Related: Terra Virtua switches to Polygon blockchain, citing environmental concerns

Accordingly, if the MATIC / USDT rate breaking above $ 1.51, accompanied by a spike in trade volume, the pair will increase its probability to rise by $ 0.89. In doing so, he would be aiming for $ 2.40 as his head-and-shoulders reverse profit target, just $ 0.30 below his current high.

Bearish configuration

If MATIC bulls fail to recover $ 1.51 as support, its price could retreat to the next support line near $ 1.35.

MATIC / USDT 3-day candle chart. Source: TradingView

Further breakdown would expose MATIC / USDT to $ 1.09, a reliable support level in recent history.

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