Although the crypto market rallied on Sunday, altcoin prices are down more than 20% compared to last week. Solana (SOL) is pointing to $70 on its daily chart with a confirmed head and shoulders pattern. According to analyst Yashu Gola, this level can be seen in the coming weeks as the pattern points to a drop of more than 45%.
Altcoin price approaches the critical support level of $87.73
The chart below shows that SOL price surged to around $217 in September 2021, dropped to the support level near $134, and then hit a record high of $260 in November 2021. Earlier this week, it bounced back to test $134 without breaking the 2022 low at $87.73. This phase of price action creates a bearish trend pattern that includes three consecutive tops, with the middle coming out around $257 (called the head) higher than the other two around $200 to $210 (left and right shoulders). Meanwhile, the three tops of the SOL stopped above a common support level at $134, called the neckline. A drop below this indicates a long downward trend towards the level of length equal to the maximum distance between the head and neckline. In SOL’s case, the distance is around $137, which sets the head and shoulders price target around $170.
trend so far
The bearish outlook came as the Solana price fell more than 22% this week. At the center of the ongoing crypto market decline is the Fed’s decision to loosen its $120 billion one-month asset purchase program, followed by three or more interest rate hikes spanning 2022. According to the analyst, if the crypto market continues its bearish trend in the coming days, the SOL price will also be at risk of confirming the head and shoulders setup.
SOL’s short-term outlook
The longer timeline chart of the SOL leans towards the long-term bearish setup, while the short-term view is relatively bullish. According to the analyst, this is due to two factors:
- First, the SOL price has dropped to the critical support level of $116, which was instrumental in limiting any downside attempts in September 2021.
- Second, the daily RSI has dropped below 30 – a classic buy signal.
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