Solana (SOL) is at risk of a major price correction in the coming weeks due to a classic bearish reversal setup.
Is a 35% SOL Price Correction Coming?
On the three-day chart, SOL price has been showing a rising wedgeconfirmed by two rising and converging trend lines and falling trading volumes in parallel.
Rising wedges usually lead to a breakout, which is resolved when the asset price breaks below the lower trend line. If the price follows the breakout scenario, it could fall as far as the maximum distance between the upper and lower trend line of the wedge.
SOL is far from a breakout but is trading inside a falling wedge range as shown in the chart below. The value is awaiting an immediate retracement from the upper trend line of the wedge, with its temporary bearish target located at the lower trend line, around $45.
SOL will be at risk of falling towards $30 if the price breaks below the lower trend line, accompanying an increase in trading volumes. In other words, one 35% price drop for September.
On the contrary, a bounce off the lower trendline could see SOL see an immediate bounce back to the apex of the wedge around $53.50.
A decisive break above the upper trend line would invalidate the bearish reversal setup.if SOL rises to the 50-3D exponential moving average (50-3D EMA; the red wave) near $58.
$SUN daily close above $45
Entered 25% size (bear market size)
will stop with close under $42 otherwise targeting $56-60 https://t.co/US0ucViHN6 pic.twitter.com/xo7zfDGMrZ
— Pentoshi (leading cattle to butcher) (@Pentosh1) August 13, 2022
SOL daily close above $45
Entered at 25% size (bear market size)
It will stop on a close below $42, otherwise the target is $56-60
Fighting the FUD
Solana’s Rising Wedge Breakout setup appears while battling a flurry of negative eventsincluding repeated network outages, centralization concerns, and a widespread exploit targeting Solana wallets.
Nevertheless, Solana rallied nearly 40% in August, mirroring other crypto assets that have gained around 11% on average so far this month.
A portion of Solana’s gains also came after his team quickly clarified that Slope, a provider of Web3 wallets, was solely responsible for the $8 million exploit of crypto wallets, including Solana’s.
After an investigation by developers, ecosystem teams, and security auditors, it appears affected addresses were at one point created, imported, or used in Slope mobile wallet applications. 1/2
— Solana Status (@SolanaStatus) August 3, 2022
Following investigation by developers, ecosystem teams, and security auditors, it appears that the affected addresses were at some point created, imported, or used in Slope’s mobile wallet applications.
Similarly, Solana released its first “Validator Health Report” on August 10 in response to allegations that its network is highly centralized. He reported that Solana’s proof-of-history (PoH) blockchain has over 1,900 block production nodes worldwide.
Almost 88% of those nodes are operated by independent entities, added the report.
Also, in MaySolana developers focused on the implementation of the first stages of their Mainnet Beta v1.10 series, introducing QUIC and QoS packages (QOSfor its acronym in English) by weight of staking and prioritization of fees to defend the network against possible outages.
“It seems that the network showed signs of stabilization after version 1.10, as lower transaction rates occurred and the daily transaction count reversed the trend between mid-May and late June.James Trautman, a researcher at Messari, noted in his Solana Q2 report.
Solana transactions per second (TPS) also improved, rising from around 700 during network outages to all-time highs above 3,000 after v1.10 began rolling out. Trautman added that:
“If implementations of v1.10 and beyond continue to drive stability along with successful ecosystem growth strategies, the fundamentals will likely move in a positive direction, and the value of the network as well.”
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