Why Polygon’s MATIC bulls could be too eager and drop the ball on this rally

Polygon (MATIC) price action has been on treading nervously this week, with weekly earnings switching back and forth between profit and loss. It all comes down to trading this Friday to see if bulls can eke out a winning week. Along with that comes the risk they might be in for a negative treat if they go in for the pop above $0.96, where bears will be waiting with a bull trap and squeeze back towards $0.80. On the other hand, patient bulls calmly riding out the bullish triangle formation will be rewarded with a profit near $1.10.

MATIC price sounding the alarm for a bull trap

Polygon price sees bulls eagerly attempting to eke out a weekly gain in the price action, which is quite understandable given the summer rally since the beginning of July. Along with that strategy comes a risk of overshooting as bulls will try to break and close above July 20, 2021, high and possibly even target $1.00. But it is probably too soon to expect, as the summer period is trading on thinner liquidity. From a technical point of view, the bullish triangle also has plenty of room to go before triggering a breakout.

MATIC price could see bears coming in hard on a break above $0.96. Bulls could get trapped on their entries in the break above $0.96 and see their positions pulled down towards $0.80 near the monthly pivot and the green ascending trend line. That would be a roughly 17% negative carry, which plenty of bulls will cut beforehand, giving bears free room to move in.

MATIC/USD Daily chart

Several traders will have identified the bullish triangle with the green ascending trend line and the High of July 20, 2021, as a base for the triangle. Expect a return towards more support around $0.80-$0.90 soon, depending on the timing, to scope up some more investors and provide fuel for the breakout. Anything sooner could be, as mentioned in the above paragraph, likely short-lived.