Polygon (POL) is trading higher this Tuesday (5). Is the current price movement just a correction or the beginning of a new trend?
With a 2% appreciation on the day, POL was once again traded above US$ 0.30 – something that had not happened since last Saturday (2).
Can traders, investors, and enthusiasts expect higher highs or will the altcoin resume its downward movement?
Polygon starts the jump
After a period of lateralization, POL began another downward movement last week, which culminated in a bottom at US$ 0.28. It is worth noting that this price level initiated a new jump, generating a hammer candle (orange circle).
This type of candle is known for anticipating trend reversals, which indeed appears to be in effect so far. This is because the price of the altcoin has risen by 8% since then.
Polygon (POL) Chart on TradingView
However, POL failed to hold above the 0.382 Fibonacci retracement level, which casts doubt on the continuation of the current corrective bounce. Failure to do so could result in a retest of its macro bottom soon.
However, technical indicators on the 1-hour chart are bullish. The EMA crossover is positive, which shows that the cryptocurrency is trading at increasingly higher levels in the short term. Furthermore, the Relative Strength Index (RSI) is above 50.
If this scenario continues, it is possible that the Polygon network's native token will continue to rise until the so-called golden Fibonacci region, between the retracement levels of 0.5 and 0.618. These levels are at $0.3117 and $0.3179, respectively.
Read more: How to buy Polygon and everything you need to know
What explains the POL's stay?
Even with the optimistic short-term scenario, POL will still need to rise a lot to offset this year's losses. Currently, the altcoin has accumulated a devaluation of 70% in 2024.
As a result, the cryptocurrency, which was once among the 15 largest in market value, is currently ranked 41st in terms of capitalization.
Fernando Pereira, analyst at Bitget, explains the reasons for this sharp drop:
Other blockchain platforms, notably Solana, have gained prominence in 2023, attracting more attention from investors and users. Solana has outperformed Ethereum on some metrics, which may have diverted market interest away from Polygon.
Furthermore, the analyst highlights that the team responsible for Ethereum's second layer network distributed 217 million tokens at the end of last year, valued at more than US$200 million at the time, to large exchanges such as Binance, Coinbase and OKX.
This movement raised concerns about selling pressure and the possible devaluation of the token.
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