MATIC on the march to $3 but must hold this support zone or face strong selling pressure

• MATIC price continues to test the rising wedge trendlines as primary support and resistance.
• EIP-1559 fee-burning mechanism could generate a reduction of MATIC’s supply by up to 0.27% for 2022.
• Downside risks are increasingly likely if bulls fail to keep pressure off MATIC.

MATIC price action has fallen below the rising wedge for the second time in January; the first occurrence was on January 8. The Kijun-Sen is the final support zone, and if it fails, MATIC could drop 20%.

MATIC price technical and fundamentals out of sync

MATIC price has some very imminent looking bearish price action ahead while the recent fundamentals are bullish. A recent upgrade on Ethereum (EIP-1559) introduces a deflationary behavior to MATIC, reducing the overall total supply over time. All things remaining the same, a reduction in supply means the underlying price/value increases.

However, despite the bullish fundamental news, the current technicals for MATIC price are definitely bearish. The bottom of the Ichimoku Cloud (Senkou Span B) at $2.08 is the final price support zone on the daily chart. If MATIC has a daily close below $2.08, an Ideal Bearish Ichimoku Breakout entry could be complete.

If MATIC does crack below the Ichimoku Cloud, then the neck-line of an unconfirmed head-and-shoulders pattern may act as support near the $2.00 mark. If not, MATIC has a clear path to test a support zone between the Volume Point Of Control at $1.50 and the 61.8% Fibonacci retracement at $1.69.

MATIC/USDT Daily Ichimoku Kinko Hyo Chart

The bearish scenario can be invalidated if bulls maintain a close above the bottom of the Cloud (Senkou Span B). Ideally, bulls can return MATIC price to a close above the Kijun-Sen at $2.42. That would likely provide enough breathing room for bulls on the sidelines to enter and begin the road to $3.

 

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