With crypto markets looking toppy in the short-term, we’re spotting support area on uptrends to watch that longer-term players make moves on on a pullback.
Avalanche (AVAX) and Polygon (MATIC) fits the bill this week. Will traders hop in long on these top tier cryptos if we see a dip?
AVAX/USD Daily
Avalanche bulls went crazy in November, full sending AVAX/USD from consolidation around the $60 handle to a near $150 high just this past week! Avalanche seems to continue benefit from its growing DeFi ecosystem as an alternative to Ethereum networks scalability issues and high transaction fees.
But it looks like bulls are in profit taking mode now, sending AVAX/USD lower to below the $115 handle (a 20% dip), and given that the stochastic is still signaling overbought conditions, the dip is not likely done just yet. We think if the broad crypto space continues to pullback, then AVAX may have another $10 – $20 before buyers start getting interested again.
As long as Avalanche continues to be a cheaper and faster alternative to Ethereum, it looks like it’ll draw in longer-term buyers for now. So, we’ll be on the look out for both bullish reversal patterns form around the 50% – 61% Fibs area and broken previous swing high over the coming week to build a potential long position. And if stochastic signals oversold conditions, that strengthens the technical case that the down move may be done.
MATIC/USD Daily
For those who are bullish on the Ethereum network, Polygon (MATIC) continues to be a token to watch. The Polygon network is a layer-2 scaling solution for Ethereum that’s been growing rapidly as many current and developing projects have been turned off by Ethereum’s fees.
And with Polygon integrating new tech to speed up transaction and make data more private (Polygon announces Polygon Miden – A STARK-Based, Ethereum-Compatible Rollup), the fundamental outlook grows more positive and could bring in further buying on a longer-term basis.
As we mentioned earlier, the broad crypto market seems to be in profit taking move after a strong run-up in October and November, and MATIC /USD was no exception as it roll up from just above $1.00 to a peak around $2.20 (a 110% move) before pulling back in November.
The bearish pressure may not be done just yet, but it looks like $1.50 down to $1.25 is the area to watch for the bulls to hold (previous strong support/resistance area and rising ‘lows’ pattern). If so and broad risk sentiment shifts away from broad risk aversion vibes, that is likely the area MATIC bulls will start working their way be in.
What do you all think? Are you watching both AVAX and MATIC as alternatives to Ether? Will we see the crypto market dip further?
