Polygon price risks 50% drop as MATIC paints inverted cup and handle pattern
Polygon (MATIC) has dropped by more than 40% from its record high of $2.92, established on Dec. 27, 2021. But if a classic technical indicator is to be believed, the token has more room to drop in the sessions ahead.
MATIC's recent rollover from bullish to bearish, followed by a rebound to the upside, has led to the formation of what appears like an inverted cup and handle pattern — a large crescent shape followed by a less extreme upside retracement, as shown in the chart below.
In a "perfect" scenario, inverted cup and handle setups set the stage for a downturn ahead. As they do, the price tends to fall towards levels that are at length equal to the maximum distance between the setup's top and bottom, when measured from the breakout level.
Therefore, if MATIC breaks bearish out of its "handle" range, i.e., a drop accompanied by an increase in volumes, it may fall toward $0.86, nearly 50% below its current prices, in the future.
Polygon's extremely bearish outlook emerged amid a broader crypto market correction in 2022.
Top tokens Bitcoin (BTC) and Ether (ETH) trimmed nearly 11% and 22% off their market valuations year-to-date. Their plunge also triggered similar downside moves elsewhere in the crypto market, with its overall valuation falling to $1.878 trillion on Feb.11 from $2.190 trillion at the beginning of this year.
Polygon's market capitalization dropped to $12.96 billion from $18.10 billion, with MATIC's per token price plunging over 30% to $1.734 in the same period. Nonetheless, a technical support confluence kept the token's bullish hopes alive.
In detail, two support levels in the form of MATIC's 200-day exponential moving average (200-day EMA; the blue wave in the chart below) and a multi-month upward sloping
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