SOL price eyes 75% rally as Solana paints a bullish reversal pattern

Solana (SOL) continued its recovery trend on June 28 while inching closer to triggering a classic bullish reversal setup.

SOL’s price gained 2.42%, reaching an intraday high of $39.40. The SOL/USD pair is now up 50% as a part of a broader retracement move that began on June 14 after falling to lows of $26.

SOL/USD daily price chart. Source: TradingView

Solana price eyes 75% rally

The latest buying period in the Solana market has been painting what appears to be an “inverse head and shoulders pattern (IH&S)” pattern.

The bullish reversal setup appears when the price forms three troughs in a row below a common support trendline called th “neckline.” The middle trough, known as the “head,” is always deeper than the other two troughs, called shoulders.

An IH&S setup resolves after the price breaks above the neckline level. Also, as a rule of technical analysis, the pattern’s profit target comes to be at length equal to the maximum distance between the head’s lowest tip and the neckline.

SOL/USD daily price chart featuring IH&S pattern. Source: TradingView

Suppose SOL breaks above its neckline resistance of $41.50. Then, the chances of continuing the bullish retracement stand around 83.5%, with its upside target sitting at over $68, about 75% above today’s price.

Interim resistance levels

Solana’s road to $68 could face hurdles in a confluence of technical resistance levels, including its 50-day exponential moving average (50-day EMA; the red wave) and a support-turned-resistance line. Both resistance levels are around $47.

SOL remains at risk of exhausting its IH&S breakout, which, in turn, could trigger a “bear flag” setup. A pullback from the $47-resistance-level, coinciding with the flag’s upper trendline, could lead to a breakdown, as shown in the chart below.

SOL/USD daily price chart featuring ‘bear flag’ pattern. Source: TradingView

As a result, SOL’s downside target comes to be approximately inside the $23–$30 range, depending on its breakdown point. 

In a similar setup, independent market analyst PostyXBT anticipated SOL’s price to reach $47. platform.twitter.com/embed/Tweet.html?creatorScreenName=cointelegraph&dnt=false&embedId=twitter-widget-0&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=1541695752140881920&lang=en&origin=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fsol-price-eyes-75-rally-as-solana-paints-a-bullish-reversal-pattern&sessionId=74221b96976ac75d73332ff10885f9ba9121f95f&siteScreenName=cointelegraph&theme=light&widgetsVersion=b45a03c79d4c1%3A1654150928467&width=550px

Nonetheless, declining volumes remain a concern, so traders should play the short-term trend until further bullish confirmation, he added. In other words, SOL’s likelihood of returning lower is high after reaching $47.

Solana is also down 85% from peak

Like most crypto assets, Solana has lost a significant chunk of its valuation compared to its November 2021 peak and is now down over 85%.

Related: Institutional crypto asset products saw record weekly outflows of $423M

Additionally, Solana’s “decentralization” has faced increasing scrutiny amid repeated network outages and a recent attempt to take control of a whale’s wallet via community voting to force liquidation.platform.twitter.com/embed/Tweet.html?creatorScreenName=cointelegraph&dnt=false&embedId=twitter-widget-1&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=1538539508462931970&lang=en&origin=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fsol-price-eyes-75-rally-as-solana-paints-a-bullish-reversal-pattern&sessionId=74221b96976ac75d73332ff10885f9ba9121f95f&siteScreenName=cointelegraph&theme=light&widgetsVersion=b45a03c79d4c1%3A1654150928467&width=550px

On the other hand, some anticipate Solana’s ecosystem to grow just like its top rival Ethereum did after the 2018 bear market. That includes Spencer Noon, the co-founder of crypto-focused Variant Fund, who said:

“Solana has a vibrant developer ecosystem and its downtime issues are solvable. This will be obvious in retrospect.”

Source : cointelegraph.com

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