A bull flag setup that is now breaking to the downside provides more bearish cues for SOL.
A rebound move seen in the Solana (SOL) market this weekend peaked at $90, down from a high of $96 on Feb. 21. As a result, SOL price technicals are now putting themselves at risk of a classic bearish reversal setup.
Solana’s price could fall to $60.
The technical pattern known as head-and-shoulders (H&S) appears when the price forms three consecutive peaks atop a common support level (called a neckline). As it usually happens, the pattern’s middle peak, known as a “head,” is longer than the pattern’s other two peaks, known as the left and right shoulders, which are of similar heights.
Once prices decisively break below its neckline, the H&S pattern tends to send them lower—at a length equal to the maximum distance between the head and the neckline. As a result, Solana, which has recently formed a similar technical structure, risks falling below $60, or nearly 30%.
Surprisingly, the H&S downside target near $60 served as support in August 2021, just before Solana’s price rally to a record high above $250.
The presence of a bear flag increases the likelihood of a downturn.
The risks of Solana experiencing another major selloff have also increased as a result of a technical pattern known as a “bear flag.”
Related: Is the bottom nearing? Solana paints its first ‘death cross,’ as SOL falls 50% in January.
Notably, the price of SOL has broken out of the bearish continuation setup. As a result, it now risks falling by as much as the length of its previous downtrend, known as the “flagpole,” as measured from the point of breakout, as shown in the chart below.
As a result, SOL’s bear flag breakout, like the H&S pattern, risks sending its price to $60 or lower.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.