MATIC setting bears up for a short-squeeze, Polygon eyes $2.50

  • MATIC price action shows several entry opportunities for both sides of the market.
  • A long entry opportunity exists after confirming that a bear trap pattern has formed.
  • A possible short entry opportunity is currently developing but has stricter entry conditions.

MATIC price may be nearing the end of its pull-back after reaching the new multi-month highs back in late October. Buyers have stepped in to support MATIC and could surprise a lot of new short sellers.

MATIC price is positioned for long and short opportunities; buyers have the advantage over the bears

MATIC price has a theoretical long trade setup ahead. That bullish entry idea is a buy stop order at $1.975, with a stop loss at $1.875 and a profit target of $2.50. This long trade setup is based on a breakout above a double-top that would confirm an overwhelmingly bullish Point and Figure pattern known as a Bearish Fakeout. The Bearish Fakeout pattern occurs when two boxes of Os fall below a multiple bottom, but then, the next X-column creates an entry after a multiple-top. The Bearish Fakeout often generates short squeeze plays because many short-sellers who enter too late get caught on the wrong side of the trade.

$0.025/3-box Reversal Point and Figure Chart

The rules for the Bearish Fakeout pattern state that if one more O forms below the current O column, then the Bearish Fakeout pattern is invalidated. However, given the volatile nature of cryptocurrencies, a little leeway could be considered appropriate. This trade is invalidated if MATIC price drops below $1.75

On the short side of the market, the hypothetical short entry is a sell stop order at $1.75, a stop loss at $1.95 and a profit target at $1.05. However, there is a caveat to this short entry. However, the short entry is only valid if a triple-bottom (regular or split) develops at $1.80. This means that MATIC needs to print at least a 3-box reversal to print a column of X's before reversing again to create the triple-bottom.

$0.05/3-box Reversal Point and Figure Chart

The hypothetical short setup is invalidated if MATIC moves above $2.00.

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