Solana (SOL) continued its recovery trend on June 28 as it got closer to triggering a classic bullish reversal setup.
SOL price gained 2.42%, reaching an intraday high of $39.40. The SOL/USD pair is up 50% as part of a broader rally that started on June 14 after falling to lows of $26.
Solana price could rise 75%
The recent buying period in the Solana market has been painting what appears to be an “inverse head and shoulders (IH&S)” pattern.
The bullish reversal setup appears when the price forms three troughs in a row below a common support trendline called the “neckline”. The central valley, known as “head”, is always deeper than the other two valleys, called shoulders.
An IH&S setup is resolved after the price breaks above the neckline level. Also, as a rule of technical analysis, the pattern’s profit target is in length equal to the maximum distance between the lowest point of the head and the neckline.
Suppose SOL breaks above its resistance at $41.50. So, the odds of a continuation of the upside move are around 83.5%, with its upside target sitting at over $68, roughly 75% above current price.
Provisional resistance levels
Solana’s path to $68 could hit roadblocks at a confluence of technical resistance levels, including its 50-day EMA (50-day EMA – the red wave) and a support line now turned resistance. Both resistance levels sit around $47.
SOL remains at risk of exhausting its IH&S breakout, which, in turn, could trigger a “bearish flag” setup. A pullback from the $47 resistance level, which coincides with the upper trend line of the flag, could trigger a breakout to the downside, as shown on the chart below.
As a result, SOL’s downside target comes in roughly in the $23-$30 range, depending on its breakout point.
In a similar setup, independent market analyst PostyXBT anticipated SOL price reaching $47.
$SUN idea
– Higher low & S/R flip
– $BTC still hasn’t pushed higher to $23k
– Play the short term trend until invalidated– Declining volume a concern
Not rushing into an entry at current price. If I don’t get filled slightly lower, so be it. pic.twitter.com/IgZbeBAq40
— Posty (@PostyXBT) June 28, 2022
However, declining trading volumes remain a concern, so traders should follow the short-term trend until further bullish confirmation, he added. In other words, the probability of SOL going down again is high after reaching once it hits $47.
Solana is also down 85% from maximum
Like most crypto assets, Solana has lost a significant portion of its valuation compared to its November 2021 peak, down more than 85% now.
Additionally, Solana’s “decentralization” has also faced increasing scrutiny amid repeated network outages and a recent attempt to take control of a whale’s wallet via community vote to force its liquidation. .
Absolute comedy. @solendprotocola supposed “decentralized” lending protocol built on Solana has “voted” to take over a whales account with emergency powers to eliminate the chance of forced liquidation.
“Decentralized” in name only. pic.twitter.com/Vrua3dFoES
— Dylan LeClair (@DylanLeClair_) June 19, 2022
On the other hand, some anticipate the Solana ecosystem to grow much like its arch rival Ethereum did after the 2018 bear market. This includes Spencer Noon, the co-founder of the crypto-focused Variant Fund, which said:
“Solana has a vibrant developer ecosystem and its downtime issues are solvable. This will be obvious in hindsight.”
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