Solana (SOL) prices may rise by more than 45 percent in the coming weeks as the cryptocurrency attempts to complete a double-bottom chart pattern against the US dollar.
Double-bottoms form at the end of a downtrend when the price drops to a low, then rises and returns to a level near the previous low. When bears are unable to push the price to a newer low, the selling sentiment becomes exhausted, resulting in a sharp upside retracement and subsequent breakout move.
Solana has been exhibiting a similar pattern since Jan.24, particularly after extending its rebound move by rising 25% week-to-date to reach above $100. Furthermore, a bullish divergence between the price and relative strength index trends of SOL indicates a high likelihood of a double-bottom breakout.
However, a bullish confirmation could occur if the price of SOL breaks above the double-bottom neckline near $120 while trading volume increases. As it happens, SOL’s upside target could be equal to the maximum distance between the double-bottom pattern’s lowest point and its neckline.
This would put Solana on track for at least $150, with a bullish move toward $170 possible, as shown in the red chart above. As the double bottom predicted SOL at $150 or higher, popular market analyst Capo warned of a potential bull trap in the Solana market, noting that altcoins in general would resume their downtrends.
The analyst identified $120 as a strong resistance level that would most likely limit SOL’s ongoing upside retracement. He also applied the well-known Elliott Wave Theory to forecast the start of Solana’s next bearish wave cycle, which is labeled “c” in the chart below.
The bearish viewpoint was consistent with a CoinShares report released last week, which revealed that most altcoin-based investment vehicles, including BNB, Polkadot (DOT), Cardano (ADA), Ripple (XRP), and Litecoin (LTC), were experiencing negative investor sentiment. Solana suffered as well, with $2.6 million in capital outflows from SOL investment products in the week ending Feb. 25.
In comparison, during the same time period, all digital asset investment products combined attracted $36 million, with multi-asset portfolios attracting the most capital — $14 million — followed by Bitcoin (BTC) 17.3 million.
02 Feb 2023
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