Polygon [POL] has responded positively at the $0.1 psychological demand zone. It tested this area at the beginning of January and then again over the weekend, bouncing 15.25% on Monday, the 2nd of January.
This response was encouraging, but it does not outweigh the longer-term downtrend of POL. The rally in January came alongside an impressive milestone POL burn of 3 million tokens in a single day.
The strong burn rate continued throughout the month. AMBCrypto reported that 25.7 million POL was burned, one of the largest monthly burns.
Yet, the wider market fear due to the selling pressure on Bitcoin [BTC] did not bode well for Polygon bulls.
Is POL bullish or bearish?
On the weekly timeframe, stretching back to December 2024, the altcoin’s trend has been bearish. On the daily chart above, we can see that it is neither bullish nor bearish.
Instead, it seems constrained within the $0.10 and $0.18 levels, forming a range.
For the second time in just over a month, the $0.0987 low was tested and held. The OBV did not make new lows either, showing an equilibrium between sell and buy pressure.
The current bounce came alongside a BTC bounce to $79k on Monday. It is safe to say that Bitcoin will have a major influence on POL price trends and could decide its next impulse move.
Assessing the potential of a POL bounce
The $0.1325 was a support level of some importance in recent weeks. The $0.13 supply zone, highlighted in red, was also a short-term area that could see a reaction from the bears.
Therefore, there is potential that the current POL bounce would extend to $0.1325.
Can it extend the gains? As things stand, this looks unlikely. Bitcoin has a bearish short-term bias until the $79.4k local resistance is breached.
Traders call to action – Wait
Long-term investors would be encouraged by the defense of the $0.1 psychological support, but it is too early to call for a recovery. Swing traders can keep an eye on the $0.13 supply zone.
A bearish reaction would be a selling opportunity. A reclaim of this level could see a rally toward $0.186.
Final Thoughts
- POL has been oscillating between $0.10 and $0.18 in recent weeks.
- Unless Bitcoin climbs back above the local resistance, a POL breakout beyond $0.12 and $0.1325 would be unlikely.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
