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SOL investors should be cautious with this patterned bullish breakout 

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SOL investors should be cautious with this patterned bullish breakout 
Source: Unsplash


  • SOL witnessed a bullish breakout from the falling wedge
  • It could fall as low as $4.45
  • SOL’s development activity has steadily declined throughout the year

Solana [SOL] seems set to rise stronger from the FTX contagion. At press time, SOL was trading at $14.09, up from $11 on 22 November. Unfortunately, in the long run, SOL may not be done with all adversity yet. 

The patterned breakout from the falling wedge could have propelled it to $17.59. However, the token currently lacks enough buying pressure to strengthen the uptrend. Moreover, a steady decline in development activity could thwart significant buying pressure.  

Therefore, SOL could fall back deep toward the $5.68 and $4.45 support levels after the fake breakout to the upside.

SOL broke new supports 

Source: TradingView

SOL rallied rapidly between June and August, forming a multi-month rising wedge (portrayed by the blue lines). Rising wedge patterns are bearish, as they are likely to be followed by a downtrend.  

SOL’s downtrend after the rising wedge led the price into a parallel channel (white). Between August and November, SOL traded within the $28-$38 range. However, the impact of the FTX implosion and significant exposure led to a further decline, breaking through some support levels.  

The $11.02 has been a solid floor for the bulls recently. The price action of SOL since 10 November has drawn a falling wedge pattern that is generally bullish. But SOL could move downward, as the current market structure is bearish.  

The On Balance Volume (OBV) has not yet risen to the level of the parallel channel (white). Thus, there is not enough buying pressure to push the bulls forward.

Similarly, the Relative Strength Index (RSI) has retreated from the oversold area but had a downtick toward the same area. This shows that sellers still have an impact despite the easing pressure. 

Therefore, the current support could be breached, and a deep drop to $4.45 could be possible in the coming weeks or months. However, a close above the 23.6% Fib level could invalidate this bias, in which case SOL could target the 38.2% Fib level ($21.66).

A decline in development activity and TVL

Source: Santiment

According to Santiment’s data, SOL’s development has been in free fall throughout the year. The decline corresponded with the token’s falling prices. Solana’s total volume locked (TVL) across DeFi platforms has declined over the past year. According to DefiLlama, SOL’s TVL has fallen from over $5 billion in January 2022 to about $280 million at press time.

Development activity could affect the long-term prices of SOL. Therefore, long-term holders should monitor the token’s development activity and BTC’s performance.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot's writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S - There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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