Recently, the Polygon Ecosystem Token, known as Polygon [POL], has encountered challenges in gaining bullish momentum.
The fluctuation in the value of Bitcoin [BTC] has not been supportive either – POL experienced a decline in parallel with BTC, without experiencing significant gains when BTC surged.
An observation made by renowned crypto analyst Ali Martinez indicated that the POL utility token has been trading within a specific range since December, ranging from $0.414 to $0.531.
On a different time scale, CryptoCrypto offered a contrasting analysis which suggested a bearish outlook.
Adoption of a Parallel Channel with a Bearish Connotation
While agreeing with Ali on the presence of a parallel channel, CryptoCrypto noted that, according to the daily chart, POL was operating within a descending channel.
This signaled a downward trend, which was evident from the price movement in the past month.
Since December, the token has been forming lower highs and lower lows as each daily trading session concludes. The bearish momentum was strongly indicated by its Awesome Oscillator.
The accumulation/distribution indicator remained stagnant within a specific range and failed to establish new lows compared with December.
Conversely, the CMF indicator stood at -0.15, which was lower than its late December level on the same timeframe, solidifying the prevailing bearish influence on the token.
Key support levels to the downside are identified at $0.418 and $0.414.
Although there were minor outflows during mid-December, the spot inflows have remained subdued since then. Notably, inflows on January 21st were trailed by a 5.9% price decline over the subsequent three days.
However, the correlation between outflows and price movements was inconsistent, reinforcing the notion of a consolidation or downtrend pattern prevailing in the market.
Traders dealing with POL are advised to maintain a bearish stance or wait for favorable conditions before initiating trades.
For swing traders, a daily closing price above $0.464 and $0.507 could serve as a signal to consider opening long positions.
Disclaimer: The views shared in this article are purely the writer’s opinions and do not constitute financial, investment, or trading advice.