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Polygon’s woes deepen as THIS flashes oversold – What now?

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Polygon’s RSI has reached oversold levels after dropping to 23 amid intense selling pressure.
91% of Polygon wallet holders were in losses at press time, suggesting a bearish market sentiment.

Polygon [POL] is on a steep downtrend after dropping by 12% in 24 hours to trade at $0.457 at press time. Amid this drop, trading volumes spiked by 33% to $248M, per CoinMarketCap.

Polygon has been facing bearish pressure, as the price has declined by around 33% in the last 30 days.

This performance has had a negative impact on wallet profitability, with the percentage of wallets that are in losses surging to 91%.

When many wallets are in losses, it causes negative market sentiment that results in further price declines. Moreover, holders might choose to sell to minimize their losses, resulting in additional sell-side pressure.

As these bearish conditions persist, are there signs of a recovery, and could this trend reverse?

RSI shows Polygon is oversold

Polygon’s Relative Strength Index (RSI) on the altcoin’s four-hour chart shows that the token is oversold. This metric has dropped to a value of 23, which is its lowest since mid-December.

An oversold RSI usually precedes a correction to the upside. Moreover, looking at past trends, POL tends to start a rally whenever the RSI reaches oversold levels. As such, the altcoin could be poised for a recovery.

However, the Average Directional Index (ADX) is yet to confirm the end of the downtrend.

In fact, the ADX line is rising, an indication that the ongoing bearish trend is growing strong and POL could drop to the 1.618 Fibonacci level ($0.416).

Source: TradingView

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Author: Muthoni Mary

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