September 30, 2021

Crypto Consolidation Patterns to Watch: MATIC & ALGO

 Today, we’re taking a quick look at high market cap but low priced crypto assets that are currently tightening up in price action. Will these consolidation patterns lead to breakouts? Will they return to their longer-term trends?


Let’s first check out the price action Algorand (ALGO) against the U.S. dollar.  ALGO is the native token of the Algorand project, a layer-1 decentralized blockchain network built to support a wide array of applications. The network went live in 2019 and has since then grown to an ecosystem of over 500 organizations using the technology. With a market cap of over $10B and its solid growth, it’s a network and crypto asset to watch for potential longer-term value appreciation.

The token’s price has been on tear higher since the July Crypto bottom where ALGO/USD traded at a low around 0.67, to topping out around 2.50 before settling at current levels around the 1.65 handle.

On the four hour chart above, we can see this has formed a descending triangle pattern, and given the overall uptrend, the probability is that the next move could be a break above the falling ‘highs’ pattern.

Traders should be on watch for that scenario to play out, but we can’t discount the possibility of a downside break as well given the current strengthening of the U.S. dollar on rising U.S. Treasury yields. If the USD continues to strengthen, no risk asset will likely be safe, and a break below the major support around 1.50 – 1.55 would likely draw in further selling pressure as more long profit-taking and fresh short-term shorts are likely to enter the picture.


Second on the watchlist is MATIC/USD. Polygon (MATIC) is the native token of the Polygon network, layer-2 scaling solution used on the Ethereum network, facilitating a multi-chain system with lower fees and higher transaction speed.

In 2021, as Ethereum gas fees rocketed higher and transactions slowed down as demand exploded, this prompted the market to look to other networks like Polygon for relief.  This likely why we saw the MATIC/USD explode higher from  0.01 on January 1st, to a high of around 2.72 in May. Since then, the market hasn’t been too kind to MATIC bulls with MATIC/USD now trading around 1.09, but it’s still a beastly sized market to trade in with a $7B market cap.

Longer-term, MATIC is likely to see demand as the network continues to gain traction (now over 7M transactions per day on Polygon), but in the short-term, it’s not looking too great. Looking at the four hour chart above of MATIC/USD, the pair is in a clear downtrend and the pressure is steady on that 1.05 support area.

Again, the U.S. dollar is currently in rally mode, so that support may not hold in the short-term, and if we do see a break that could draw in more momentum players to take MATIC/USD to the next support area, possibly to around 0.95 to 1.00.

Be on the lookout for that potential scenario to play out, but also be aware that if U.S. dollar sentiment reverses, then Polygon’s positive fundamentals may come back onto the forefront on MATIC/USD. That may mean 1.00 – 1.05 could hold as a major support area once again and turn into the launch pad for a Q4 rally, especially if we see one last crypto pump before the end of the year as some analysts expect.

What do you all think? Are ALGO/USD and MATIC/USD set to break out from their ranges? Are you bullish or bearish on the pairs for Q4?