Solana SOL price is forming a strong reversal pattern.. Is it going to fall further or is it a buying opportunity?
The price of Solana (SOL) rose sharply after Donald Trump won the presidential election by more than 68%. Before entering a state of stability and sideways trading tending to the downside, in a natural correction movement.
As the hype and excessive optimism in the market subsided, many cryptocurrencies began to decouple their movement from the leading currency, Bitcoin. Many traders in the market began to focus on the factors specific to each project and cryptocurrency.
The general sentiment in the medium and long term is still very positive, so the question everyone is looking for an answer to is how far the price can go before it starts rising again.
Head and Shoulders Reversal Pattern Formation
Technically, Solana SOL price often respects classic technical levels even at the peak of big moves.
In the last bullish wave, it rose inside an ascending price channel on the 4-hour chart, then formed a descending channel in the current correction movement, as shown in the attached chart.
But more importantly, a head and shoulders reversal pattern has formed, with the neckline at the $222 support level.
If SOL price manages to break this level, it will signal further correction and decline to $200 as an initial target. Then $185 as a second target.
On the other hand, if the price rises, breaks the upper limit of the descending price channel and closes above it, this means that the pattern has failed, and the price will return to rise towards the resistance level at $245 as an initial target, then try to target the top at $263 as a second target.
The most important technical levels to buy Solana SOL?
If we zoom in on the daily chart, we can see that the neckline at $222, coincides with the 23.6% Fibonacci retracement level.
The next support level in the $200-$205 region coincides with the 38.2% Fibonacci retracement level. This makes it a strong barrier against any downside attempts. In technical analysis, the 38 Fibonacci level is often considered stronger than the 23 level.
In this case, you can wait for the Solana SOL price to drop to lower levels to enter with reduced risk. Or divide the capital by entering from the current levels, and reinforce if the price drops.
Ultimately, the best entry area depends on your risk strategy, trading style and goals.
Of course, always keep in mind the worst possible scenario, especially in the cryptocurrency market.
