Polygon Should See Further Short-Term Downside

Polygon (MATIC-X) is a Layer 2 scaling solution backed by Binance and Coinbase. The project seeks to stimulate mass adoption of cryptocurrencies by resolving scalability issues on various blockchains. Polygon combines the Plasma Framework and the proof-of-stake blockchain architecture.

MATIC/USD Daily Chart

Polygon started a rally from the July 20, 2021 low. From there we can see 5 upward waves forming a Leading Diagonal Structure, which ended on Dec. 27. Wave ((1)) ended an impulse structure at 1.7991. Then Polygon corrected in 3 swings, making a zig-zag structure and ending wave ((2)) at 1.0148.

Another rally resumed from the low, completing wave ((3)) at 2.2200. A pullback, which formed a flat correction, then ended wave ((4)) at 1.4446. A last push higher made an ending diagonal structure and completed wave ((5)) and wave I of the leading diagonal at the 2.9249 level.

At the end of December, the cryptocurrency dropped strongly, losing more than 15%. Polygon continued falling in 3 swings to the 2.0210 level, and we labeled this movement as wave ((W)). Then we saw a bounce ending at 2.2919 before turning lower again.

We labeled the bounce as wave ((X)), and from here we are forecasting for 3 more swings down to draw a double correction structure to end wave ((Y)) and wave II. We believe the 1.5016–1.1660 area may be where Polygon will continue with the rally.