Polygon (POL), formerly known as MATIC, has recently experienced a surge in price, gaining 15% in just three days. The strong short-term momentum, accompanied by a nearly 40% increase in daily trading volume, has caught the attention of traders. However, despite the bullish signals on the 4-hour timeframe, the higher timeframes still show a bearish market structure. This mixed outlook has created a sense of caution among investors, as key resistance levels loom large.

Short-Term Momentum and Bullish Structure

Over the past two and a half days, Polygon has demonstrated strong bullish momentum, making it a favorable asset for short-term traders. On the 4-hour chart, the price has broken above local resistance at $0.22, signaling a potential shift in market sentiment. The On-Balance Volume (OBV) indicator has also reached new highs, confirming increased buying pressure. Additionally, the Relative Strength Index (RSI) on the 4-hour chart has surged into overbought territory, currently sitting at 84, indicating that the price has experienced rapid upward movement.

This bullish structure on the 4-hour timeframe is a clear sign of strength in the short term. If the price continues to push higher and breaches the $0.26 level, the market could shift to a more bullish posture on the 4-hour chart. However, key resistance levels at $0.265 and $0.285 will be critical in determining whether the bullish momentum can continue or if a reversal is imminent.

Resistance Levels and Bearish Outlook on Higher Timeframes

While the short-term momentum looks positive, the broader trend on the daily and weekly timeframes remains bearish. Polygon had been trading within a descending channel earlier this year, and by late February, it dipped below previous lows, accelerating the ongoing downtrend. The daily chart indicates that this decline has yet to reverse, with key resistance levels at $0.285 and $0.3 standing in the way of any potential uptrend.

For Polygon to break free from the bearish structure, these levels must first be turned into support. Only then can the market shift in favor of the bulls. As of now, POL is trading below these key resistance levels, signaling a lack of demand above these zones. If the price struggles to maintain momentum and fails to break through $0.285 and $0.3, the overall bearish trend could persist, causing more downward pressure in the coming days.

Technical Indicators Show Mixed Signals

Despite the bearish outlook on higher timeframes, technical indicators are hinting at a potential shift in momentum. The OBV has been steadily climbing over the past ten days, signaling increasing buying pressure. Similarly, the RSI on the 1-day chart has been moving toward the neutral 50 level, which could indicate a shift toward bullish momentum if it crosses above 50. However, the RSI remains below the key resistance levels, suggesting that the bullish momentum is still uncertain.

The short-term indicators on the 4-hour chart may show promise, but the overall market structure needs to show stronger signs of a sustained uptrend for traders to feel confident in jumping into long positions. Until then, the $0.285 and $0.3 resistance zones will remain significant obstacles for the bulls.

Key Takeaways for Traders

For traders, the current market conditions for Polygon present both opportunities and risks. Short-term traders might find value in the bullish momentum seen on the 4-hour chart, but they should remain cautious as resistance at $0.265 and $0.285 looms large. Swing traders and investors, on the other hand, may want to wait for confirmation that the higher timeframes are shifting toward a bullish trend before entering new positions.

In conclusion, Polygon’s short-term momentum is undeniable, but it faces strong resistance levels that could hinder further gains. Traders should carefully monitor price action at critical levels around $0.26, $0.265, and $0.285, as these will determine whether the current bullish structure can continue or if a bearish reversal is on the horizon.