- POL appears to have formed a bull flag on its four-hour chart, suggesting an uptrend ahead.
- This uptrend may face resistance given that a majority of holders have not yet become profitable.
Polygon (POL) was trading at $0.655 at press time, following an 11% gain in 24 hours. These gains represent a reversal of downtrends, given that the price remained down 7% over the past seven days.
Polygon, like most altcoins, saw a strong uptrend in late November, before hitting a snag earlier this month. This uptrend and the subsequent decline formed a bull flag on the four-hour chart of POL.
This trend suggests that POL could continue its uptrend, but more buying volume is needed to support a breakout.
Source: Tradingview
The volume histogram bars represent minimal buying and selling activity. However, the Money Flow Index (MFI) suggests buying activity is increasing after rising to 62.
The Moving Average Convergence Divergence (MACD) also shows the bulls regaining control after the MACD histogram bars turned green, an indication of increasing buying activity.
At the same time, the MACD line on this lower time frame is in an uptrend, and if it rises above the signal line, it will be a confirmation of a short-term uptrend.
Key levels to watch
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) metric shows that nearly 10,000 addresses purchased POL between $0.65 and $0.67. This price zone could act as a support level, with a decline below likely to cause a downturn.
Source: In the block
The other cohort to watch is the 10,270 addresses that purchased over 31 million POL tokens between $0.67 and $0.69. This area could act as a strong resistance level since these addresses could start selling off once they become profitable.
Polygon’s dApp business could impact price
Data from DappRadar shows a notable drop of more than 8% in Polygon’s seven-day dApp volumes, which stood at $2.41 billion at press time. Unique active wallets (UAWs) also fell 10%.
Source: DappRadar
However, on the decentralized finance (DeFi) front, Polygon has seen a strong recovery, with total value locked (TVL) reaching $1.195 billion annually. DeFiLlama. The TVL is now at its highest level in over a month.
If the Polygon network continues to show strength and growth, this could bode well for POL.
Is your wallet green? Check out the POL profit calculator
Long/Short Ratio Shows Shift in Sentiment
Polygon’s long/short ratio fell to a monthly low of 0.79 on December 9 after an increase in short selling activity. However, this ratio has since increased to 0.90.
Source: Coinglass
POL’s long/short ratio still shows bearish sentiment, given that 52% of traders are short sellers. This indicates that there are fewer traders optimistic that the uptrend will continue.
