Solana (SOL) risks a 35% plunge in the coming days as it gets closer to painting a so-called “megaphone” pattern.
SOL award “megaphone” pattern
Specifically, Megaphone setups consist of at least lower lows and two higher highs and form during a period of high market volatility. But generally, these patterns consist of five consecutive swings, with the last typically acting as a breakout signal.
SOL has been plotting a similar pattern since early 2022, with the coin pulling back after testing the megaphone’s upper trendline near $140 as resistance – the fourth wing.
As a result of the pattern, Solana token could extend its decline to test the megaphone’s lower trendline as support near $65, around 35% below today’s price.
Could SOL keep crashing?
If this scenario holds true, SOL could continue to plummet after forming the fifth swing on its dominant megaphone structure. While it is difficult to find a perfect downside target in the event of a breakout, traders typically select it by measuring the distance between the two trendlines from the point where the lower one breaks and book profits when the price hits 50-50%. reached 60% of this distance.
A bearish breakout risks taking the price of SOL close to $40 in the coming weeks.
A pullback scenario
On the other hand, SOL bearish megaphone setup might fail its breakout target as the price holds above a flood of concrete support levels.
These levels include the SOL 50-week exponential moving average (50-week EMA; the red wave) and an up-sloping trendline (the black line) that have served as zones of accumulation for traders, as illustrated in the chart below.
As a result, an early pullback from the 50-week EMA could invalidate the megaphone scenario.
Suppose the price breaks below the 50-week EMA just to seek a bounce from the rising trendline support. If so, it could confirm the presence of a “rising wedge” or “bear flag” conjugated with the upper trend line of the bullhorn pattern – again a bearish setup.
The downside target of the rising wedge appears to be near $60 after measuring the maximum distance between its upper and lower trendline (around $40) and subtracting from the potential breakout point near $100.
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Meanwhile, the bear flag’s downside target is near $30 after calculating the height of its previous uptrend (around $60) and subtracting it from the potential breakout point near $90.
The views and opinions expressed herein 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.
https://cointelegraph.com/news/solana-risks-35-price-crash-with-sol-price-chart-megaphone-pattern Solana risks a 35% price crash with the SOL price chart’s “megaphone” pattern