We’ve got another longer-term setup to check out, this time on Polygon (MATIC) as bulls have held a major support area like a champ. Is there a return to the uptrend ahead?
MATIC/USD: Daily
MATIC/USD Daily Crypto Chart
Yesterday, I briefly discussed the macro picture and how the recent extremely bearish influence on the crypto market may be fading. That makes severely beaten down digital assets with strong fundamentals attractive for longer-term long positions, especially if bullish global sentiment returns.
If that scenario were to play out, I pointed out a technical setup to watch on bitcoin, and for today, I think there’s a similar setup to watch in Polygon (MATIC).
Ethereum‘s network congestion and high gas fees has made layer-2 scaling solutions like Polygon (MATIC) an asset to watch for potential price appreciation in 2022.
Not only is the layer-2 scaling narrative likely to draw in capital, but Polygon’s growing exposure to the NFT and gaming markets is likely very attractive to investors as well.
This is actually already the case as Polygon raised $450M last week from big name investors like Sequoia Capital, Tiger Global, Dragonfly Capital and others in the mix. When big investors jump into a project, this vote of confidence could attract other players, potentially bidding up the price over time.
In terms of price action, there are arguments that could draw in the technical traders and short-term players. We’ve got a simple setup looking favorable for the bulls as MATIC/USD’s recent drop from an all-time (around $2.88) to the January low of $1.30 seems to have stabilized.
This area is a major psychological area that flipped from resistance to support back in November, and the longer this area is able to hold, the odds of a return to the uptrend grow.
And if using this area to structure a long-term long position, with a tight stop below the current swing lows and when targeting the previous ATH and beyond, you have potential return-on-risk setup ranging from 2x – 3x (depending on where you set your entries and exits, or how you scale in and out of a position).
But what do you all think? Is it time for MATIC to return to the uptrend? Or will the macro environment worsen and send the crypto markets lower? Let me know in the comments section below!
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