SOL’s 25% rally this week brings into play a ‘double bottom’ pattern

Solana (SOL) price may rise more than 45% in the coming weeks as the cryptocurrency looks to complete a double bottom chart pattern against the US Dollar.

A price of USD 150 per SOL in the near future?

Double bottoms usually appear at the end of a downtrend when the price falls to a low, rebounds and returns to the level near the previous low. As the bears are unable to push the price to a new low, the selling pressure dries up, leading to a strong pullback to the upside and a subsequent breakout move.

SOL has been painting a similar pattern since Jan 24, especially after extending its recovery move by rising 25% so far this week to break above $100.

What’s more, A visible bullish divergence between Solana token price and RSI trends indicates a high probability of a breakout of the double bottom.

Daily chart of the SOL/USD pair with the double bottom pattern and the bullish divergence. Source: TradingView

However, a bullish confirmation could come if SOL price breaks above the neckline of the double bottom near $120 on an increase in trading volume. In this case, the bullish target of the token could be equal to the maximum distance between the lowest point of the double bottom pattern and its neckline.

This would put SOL on track to at least $150, with the possibility of continuing the move higher towards $170, marked in red in the graph above.

Risks of a Bull Trap

Since the double bottom suggests a price of USD 150 or more for SOL, andhe popular market analyst “Capo” warned of a possible bull trap in the Solana market, noting that altcoins, in general, would resume their downward trend.

The pseudonymous analyst presented the $120 level, the neckline of the double bottom, as a solid resistance level that would most likely cap the current bullish movement of SOL. He also applied the popular Elliott Wave theory to hint at the start of the next Solana bearish wave cycle, labeled “c” on the chart below.

SOL/USD daily chart. Source: Capo on TradingView

“It’s impossible for me to be bullish here, after the breakout of all EM bullish moves + upside correctives,” said Capo on March 1, adding:

“You can enjoy the hikes in the shorter time frames while they last, but don’t get too comfortable.”

The bearish outlook aligned with a CoinShares report released last week that showed most altcoin-based investment vehicles witnessing negative investor sentiment, including Binance Coin (BNB), Polkadot (DOT), Cardano (ADA), Ripple (XRP) and Litecoin (LTC).

Capital flow by asset in the week ending February 25. Source: Bloomberg and CoinShares

Solana also suffered, as in the week ending February 25 investment products in SOL saw withdrawals worth $2.6 million.

By contrast, all digital asset investment products combined attracted $36 million in the same period, with multi-asset portfolios receiving the most capital at $14 million, followed by Bitcoin products at $17.3 million. .

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.

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