Solana (SOL) is showing new bullish potential for breakout traders, offering a low-risk opportunity with its bullish reversal pattern.
According to CoinDesk analysts, the "bullish reversal" pattern observed on the price chart of Solana (SOL) stands out as a low-risk opportunity from a technical analysis perspective. This pattern creates significant space for breakout traders and is considered a signal that could signal the beginning of major bull runs.
SOL rose more than 7% this week to $193, finding support at the trendline connecting the March and July highs. The same line connected with another trendline connecting the April and August lows, creating a broad descending channel from March to October. Breaking out of this channel in early November, SOL quickly climbed above $260, but last week it pulled back to its breakout level. This retracement is being described by technical analysts as a “bullish retracement” pattern, offering a lower-risk entry point. Breakout traders can limit their potential losses by placing their stop-loss levels just below this point.
The bullish reversal pattern can also be explained by investor psychology. According to the prospect theory, investors generally tend to avoid risk in order to secure their profits. This prevents prices from rising rapidly after the breakout and prices return to the breakout point.
The recent moves of SOL support this trend. If SOL continues to rise, traders who took profits after the breakout may re-buy, further strengthening the bullish momentum.
Similarity with Bitcoin
Bitcoin (BTC) also exhibited a similar pattern in the second half of 2023, paving the way for a major bull run. However, if the SOL price fails to hold at this level and returns to the channel, this pattern may be invalidated.
Solana’s current price action presents an opportunity that should be watched closely by breakout traders and technical analysts. Investors may consider taking a position based on these developments.