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Solana (Sol) prices could drop to $70 apiece in the coming weeks as a head-and-shoulders pattern appears on the daily time frame and could point to a decline of over 45%.
The figure below shows SOL price A rally to near $217 in September 2021 fell to support near $134 before hitting an all-time high of $260 in November 2021. Earlier this week, the price pulled back and tested the same $134 support before falling to a 2022 low of $87.73.
Price action at this stage appears to have formed a head-and-shoulders pattern, a bearish reversal pattern consisting of three consecutive highs, the center one at around $257 (called the “head”) above the other two at $200 to $210 (left and right shoulders).
Meanwhile, SOL has three peaks above a common support level at $134, known as the “neckline.” A break below it indicates that the downtrend extends to a level with a length equal to the maximum distance between the head and the neckline.
In the case of SOL, the distance is around $137, with a head and shoulders price target near $170.
Trends so far
The price of SOL has fallen by more than 22% this week, and altcoins are currently down around 55% from their all-time highs, basically in line with other large digital assets including Bitcoin, so the outlook is bearish.bitcoin) and ether (Ethereum).
Central to the continued decline in the cryptocurrency market is the Fed’s Decide Unwind its $120 billion monthly asset purchase program, followed by three or more rate hikes throughout 2022.
The central bank’s easy monetary policy has helped push the cryptocurrency market’s valuation from $128 billion since March 2020 to as high as $3 trillion in November 2021. As a result, the dwindling evidence has been influencing investors to limit their exposure to overextended markets, including Solana, which has gained nearly 12,500% since March 2020.
Therefore, SOL is also at risk of validating its head and shoulders setup if the cryptocurrency market continues to fall in the coming sessions.
Short-term outlook for SOL
While SOL’s longer time frame charts tend to be bearish over the longer term, its short term outlook looks relatively bullish.
related: Bitcoin plunges to six-month low near $38,000
This is mainly due to two factors. First, SOL price has fallen to a key support level at $116, which should help limit its downside attempt in September 2021. Second, its daily relative strength index (RSI) fell below 30 – a classic buy signal.
The views and opinions expressed here are those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk and you should do your own research when making a decision.
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