The Solana (SOL) price may drop to $ 70 per token over the next few weeks as a head and shoulders layout appears on the daily chart which may indicate a drop of more than 45%.
The chart below shows that the price of SOL rose to almost $ 217 in September 2021, fell to support close to $ 134, and then reached a new all-time high of $ 260 in November 2021. Earlier this week, the price fell again. For the test, same $ 134. Pre-collapse support for 2022 lowest at $ 87.73.
Weekly SOL / USD price chart showing head and shoulders. Source: Trading View
This phase of price action appears to have formed a head and shoulders pattern, a bearish reversal pattern containing three consecutive peaks, with a median output close to $ 257 (referred to as a head) higher than the other two around $ 200- $ 210 (right) . and left shoulder). .
Meanwhile, the three peaks of SOL were above the overall support level of $ 134, called the neckline. A fall below indicates a downward trend that extends to a level with a length equal to the maximum head-to-neck distance.
When it comes to SOL, the distance is around $ 137, which gives a head and shoulders price target around $ 170.
trend so far
The bearish outlook came after the price of SOL fell above 22% this week and the altcoin is currently around 55% from the all-time high, which is very much in line with other major digital assets, including Bitcoin (BTC) and Ethereum (ETH) ). ).
Weekly price chart of BTC / USD vs ETH / USD. Source: Trading View
At the heart of the ongoing downturn in the crypto market is the decision by the US Federal Reserve to cancel its $ 120 billion-a-month buying program, followed by three or more rate hikes through 2022.
The central bank’s loose monetary policy has helped increase the value of the cryptocurrency market from $ 128 billion since March 2020 to $ 3 trillion in November 2021. which has reached almost 12,500% since March 2020.
As a result, if the cryptocurrency market continues to fall in the coming sessions, SOL also risks confirming the setup for head and shoulders.
SUN short-term notice
While the long-term chart for SOL is moving towards an extended bearish setup, the short-term outlook looks relatively bullish.
Related: Bitcoin falls to a six-month low near $ 38,000
Daily SOL / USD price chart. Source: Trading View
This is primarily due to two factors. First, the price of SOL fell to the critical support level of $ 116, which helped limit its bearish performance in September 2021. Second, the daily relative strength index (RSI) fell below 30, a classic buy signal.