Why MATIC’s resistance breakout might still be on the table

It makes sense to sell MATIC at its current price level to cash out from the recent rally.

This decision might particularly be enforced by the slight pullback that it has achieved from its latest top.

However, there is still potential for more upside that investors should consider.

The latest bullish uptick since mid-June allowed MATIC bulls to dominate, pushing its price as high as $0.98. The latter resulted in the retest of a long-term descending resistance line, hence some investors have taken this as a take-profit sign.

This explains the 12% retracement that has taken place since then, to MATIC’s press time price of $0.86.

Source: TradingView

A key highlight of MATIC’s current price action is that the retracement was characterized by low momentum.

One would normally expect a substantial sell-off after a rally by more than 200% and after pumping into overbought territory.

This either means that there is still some bullish pressure preventing a deeper bearish performance, or many MATIC investors are still holding on to their coins.

Chasing the flow

MATIC’s supply distribution confirms the subsiding selling pressure, especially from addresses holding more than one million coins. The addresses that currently hold the largest share of MATIC coins in circulation have stopped selling, thus explaining the reduced sell pressure.

Source: Santiment

The remaining selling pressure especially in the last 24 hours came from addresses holding between 10,000 and one million coins.

Any bullish volume is currently not enough to yield a significant recovery. However, the slight increase in the balance on top addresses confirms that there might still be some upside.

On the other hand, the low velocity suggests that it might just be a retest of the resistance line, hence any resulting bullish pressure might not have much upside.

Source: Santiment

MATIC is still trading at less than half the mid-point from its historic top to its 2022 low. It might still achieve more upside in the next few weeks, perhaps even cross above its 200-day moving average.

Such an outcome would result in a resistance breakout above the support line. However, investors should still keep an eye out for the possibility of capitulation, especially if the bulls fail to take over.