- POL appears to have formed a bull flag on the four-hour chart, indicating an upcoming uptrend.
- This uptrend could meet resistance as a majority of holders have yet to become profitable.
Polygon [POL] trading at $0.655 at the time of writing, after gaining 11% in 24 hours. These gains are a reversal of bearish trends, as the price is 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 subsequent decline formed a bull flag on POL’s four-hour chart.
This pattern suggests that POL could continue its uptrend, but more buying volumes are needed to support a breakout.
Source: Tradingview
The volume histogram bars represent minimal buying and selling activity. However, the Money Flow Index (MFI) index suggests buying activity is increasing after rising to 62.
The Moving Average Convergence Divergence (MACD) also shows bulls regaining control after the MACD histogram bars turn green, an indication of rising buying activity.
At the same time, the MACD line on this lower time frame is in an uptrend, and if it crosses the signal line, it will be a confirmation of short-term bullishness.
Important 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, where a drop below it could trigger a downturn.
Source: IntoTheBlock
The other cohort to keep an eye on are the 10,270 addresses that purchased more than 31 million POL tokens between $0.67 and $0.69. This zone could act as a strong resistance level as these addresses could start selling off once they become profitable.
Polygon’s dApp activity may impact pricing
Data from DappRadar shows a notable decline of more than 8% in Polygon’s seven-day dApp volumes, which stood at $2.41 billion at the time of writing. Unique Active Wallets (UAWs) also fell 10%.
Source: DappRadar
However, in the decentralized finance (DeFi) space, Polygon has seen a strong recovery, with Total Value Locked (TVL) increasing to $1.195 billion per year. 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 portfolio green? View the POL profit calculator
The long/short ratio shows a shift in sentiment
Polygon’s long/short ratio fell to a monthly low of 0.79 on December 9, following a surge in short-selling activity. However, this ratio has since risen to 0.90.
Source: Coinglass
POL’s long/short ratio still shows bearish sentiment as 52% of traders are short sellers. This indicates that there are fewer traders who are optimistic about a continued uptrend.
