Solana (SOL) has been navigating a challenging correction phase for approximately two months, during which its fortunes have ebbed and flowed. The most recent dip, occurring on Aug. 15, was a direct response to a sudden decline in the price of Bitcoin, sending shockwaves throughout the crypto market. However, a closer examination of Solana's price chart reveals an emerging inverse head and shoulders pattern.
For those unfamiliar with the inverse head and shoulders pattern, it is a technical chart formation that signals a potential trend reversal. It consists of three key components: a lower low (the head) with two higher lows on either side (the shoulders), forming an inverted "T" shape. This pattern typically signifies a shift from a bearish trend to a bullish one, making it an enticing prospect for investors.
Solana appears to be sketching out this intriguing configuration, hinting at the possibility of a significant upswing in its price. However, the realization of this bullish scenario hinges significantly on SOL's ability to breach a crucial resistance point known as the neckline.
Solana's Potential Trajectory
As of the latest data available on CoinGecko, Solana (SOL) is currently trading at $23.79. Over the past 24 hours, the cryptocurrency experienced a slight dip of 0.6%, while it boasted a seven-day rally of 9.9%. These fluctuations reflect the ongoing battle between buyers and sellers, each vying for control of SOL's price trajectory.
SOL seven-day price movement. Source: Coingecko
SOL: From Support To Vulnerability
Solana has come a long way from its support level at $22.38, offering sellers an opportunity to exert pressure on the cryptocurrency. If the selling pressure persists, price predictions indicate that SOL could drop another 12%, potentially reaching a price of $18.8. The market's vulnerability underscores the need for a cautious approach, both for existing investors and potential buyers.
A closer examination of the daily timeframe chart reveals a distinct downward trend characterizing the ongoing correction phase of the cryptocurrency. Sellers are likely to continue exploiting any resistance points during bullish bounces, making it essential for investors to exercise caution.
As of today, the market cap of cryptocurrencies stood at $1.06 trillion. Chart: TradingView.com
As the market continues on its downward trajectory, potential buyers are advised to exercise patience. The best strategy might be to wait until the neckline resistance is breached, signaling a change in trend. Timing remains paramount, and investors should be prepared to act when the conditions are right.
Solana's journey through the correction phase has been a rollercoaster ride for investors. In the midst of ongoing market fluctuations, staying informed and cautious is essential for both existing and potential investors in SOL.
(This site's content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).
Featured image from PYMNTS
Source: NewsBTC.com
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