Double Top Reversal Sets Solana Price Correction to Hit $120

Solana, the layer 1 cryptocurrency initiated April on a bearish note in tandem with the broader market. The bearish downturn initiated at $205, plunged the coin price 12.6% to current trade at $179. Analyzing the daily chart reveals this reversal as the formation of a double-top pattern, suggesting the asset is poised for prolonged downfall. However, will the upcoming Bitcoin halving invalidate this thesis for a renewed recovery?

Also Read: Solana Strategy Head Austin Federa On Network Glitch, We Will “Overcome”

Solana Price Faces Double Top Pattern and Network Efficiency Concerns

Amid the pre-halving consolidation in the crypto market, the Solana price witnessed intense supply pressure at $205. The coin reverted twice from this resistance twice within three weeks indicating the sellers are actively defending this barrier.

Utilizing this resistance as a local top, the SOL price develops a bearish continuation pattern called a double top. In theory, this chart pattern reflects the building selling pressure and potential for prolonged correction.

The SOL price currently trades at $178 and is gradually heading to the pattern’s support at $163. A bearish breakdown below this support will put sellers at an advantage and may drive a 25% drop to hit $120.

Contrarian Opportunities Emerge Amid Solana’s Double Top Formation

In a recent observation by the esteemed trader Alicharts, it was noted that the crowd sentiment around Solana’s native token has reached a notable low point, comparable to the sentiment after the network’s outage on February 6th. 

This downturn in sentiment is visually captured through a sentiment analysis chart, which shows a substantial decline in social volume and sentiment score coinciding with a decrease in the SOL price. Alicharts suggests that such pessimism in the market may actually present a contrarian opportunity for investors.

Crowd sentiment for $SOL hasn't been this low since the #Solana network outage on February 6. Being contrarian now might just pay off! pic.twitter.com/huLZIsafTt

— Ali (@ali_charts) April 6, 2024

As the Fibonacci retracement tool, the SOL price must sustain above the 50% retracement level at $111 to keep the broader trend bullish for this asset.

Technical Indicator

• Directional Movement Index (DMI): A bearish crossover between the DI+(blue) and DI-(pink) indicates the near-term trend is turning bearish.
• BB indicator: The squeezed range of Bollinger band indicators reflects increasing volatility in SOL.