MATIC could rise 18% with bear trap
CriptoFácil – As the news appeared on the network in the last two weeks, the price of MATIC should appreciate. However, the price recorded a steady drop between two converging trend lines, seen in the chart below.
On the 4-hour timeframe this correction phase is shaped into a famous bullish continuation pattern called a descending wedge. And this pattern is likely to influence the MATIC futures price with up to 18% upside potential.
Trap for sellers
In theory, when an asset’s price is falling within converging trend lines, it indicates a gradual loss of bearish momentum. That is, the asset is close to reaching a bottom and preparing the ground for further increases.
As the currency price reaches the peak of the wedge pattern, buyers usually regain control of the trend and break the overhead line. Then the market breaks out to start a bullish rally.
However, with increasing uncertainty in the cryptocurrency market, the price of MATIC has displayed a false breakout of the pattern’s support trendline. On March 27, the price broke above the lower trend line, indicating sellers’ dominance and the possibility of further declines.
Furthermore, sellers were unable to sustain lower levels and, with the 1.5% rally recorded on Tuesday, the price of MATIC has regained the trend line.
In this scenario, MATIC’s movement depends on two factors. First, the price’s ability to show sustainability above the support trendline. The other factor is if the buyers can drive the price towards the overhead trendline.
What to expect?
This sell trap must have caught aggressive short sellers who may face forced liquidation by a tight stop loss and thus increase buy orders in the market.
In any case, keen traders looking for an entry opportunity should wait for a bullish breakout of the pattern’s resistance trend line. This potential breakout could push MATIC’s market cap to the $1.2 mark. Given MATIC’s current price ($1.06), that would give it a 12% upside at the peak of the move.
On the other hand, if sellers take the initiative again, then the correction should continue and show more strength. In that regard, MATIC could look for the $1.03 and $0.94 supports, or an 11% drop from the current price.