Bearish chart pattern hints at $70 Solana (SOL) price before a possible oversold bounce

Solana (SOL) terms whitethorn autumn to $70 per token successful the coming weeks arsenic a caput and shoulders setup emerged connected the regular timeframe and perchance points toward a 45%+ decline.

The illustration beneath shows that SOL terms rallied to astir $217 successful September 2021, dropped to a enactment level adjacent $134 and past moved to found a caller grounds precocious of $260 successful November 2021. Earlier this week, the terms fell backmost to trial the aforesaid $134-support level earlier breaking to a 2022 debased astatine $87.73.

SOL/USD play terms illustration featuring caput and shoulders setup. Source: TradingView

This signifier of terms enactment appears to person formed a caput and shoulders setup, a bearish reversal signifier containing 3 consecutive peaks, with the mediate 1 astir $257 (called the head) coming retired to beryllium higher than the different 2 astir the $200 to $210 (left and close shoulders).

Meanwhile, SOL‘s 3 peaks person stood atop a communal enactment level astatine $134, called the neckline. A autumn beneath it signals an extended downtrend to the level astatine magnitude adjacent to the maximum region betwixt the caput and the neckline.

In SOL‘s case, the region is astir $137, which puts its caput and shoulders terms people astatine astir $170.

The inclination truthful far

The bearish outlook came arsenic SOL terms dropped by much than 22% this week and presently the altcoin is astir 55% from its grounds high, overmuch successful enactment with different large-cap integer assets including Bitcoin (BTC) and Ether (ETH). 

BTC/USD vs. ETH/USD play terms chart. Source: TradingView

At the halfway of the ongoing crypto marketplace diminution is the United States Federal Reserve‘s determination to unwind its $120 cardinal a period plus purchasing programme followed by 3 oregon much involvement complaint hikes dispersed passim 2022.

The cardinal bank‘s escaped monetary policies had assisted successful pumping the crypto market‘s valuation from $128 cardinal since March 2020 to arsenic precocious arsenic $3 trillion successful Nov. 2021. Therefore, the grounds of tapering has been influencing investors to bounds their vulnerability successful over-pumped markets — including Solana — which had gained astir 12,500% since March 2020.

As a result, if the crypto marketplace continues declining successful the sessions ahead, SOL volition besides beryllium astatine hazard of validating its caput and shoulders setup.

SOL‘s abbreviated word outlook

While SOL‘s longer timeframe illustration leans toward a prolonged bearish setup, its short-term outlook looks comparatively bullish. 

Related: Bitcoin dumps to deed six-month lows adjacent $38K

SOL/USD regular terms chart. Source: TradingView

That is chiefly owed to 2 factors. First, SOL terms has fallen to a captious enactment level of $116 which was instrumental successful limiting its downside attempts successful September 2021. And second, its regular comparative spot scale (RSI) dropped to beneath 30 — a classical bargain signal.

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.