Solana’s weekend rally risks turning into a bull trap

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%.

slimg1

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.

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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.

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