Solana market faces multiple bearish setups if it breaks below its 50-week moving average.
Solana (SOL) is at risk of collapsing 35% in the next few days as it moves closer to forming a pattern called “megaphone”.
In detail, megaphone setups consist of one lower low and two higher highs, formed during a period of high market volatility. Nevertheless, generally, these patterns consist of five consecutive swings, with the last one usually acting as a breakout signal.
SOL has been forming a similar pattern since early 2022, with the coin pulling back after testing the upper megaphone trend line near $140 as resistance – the fourth wing.
Because of the pattern, the Solana token could extend its decline to test the lower megaphone trend line for support near $65, roughly 35% below current price.
Could SOL drop further?
If this scenario plays out, SOL could collapse further after forming the fifth wave in its predominant megaphone structure. While finding a perfect downside target on a breakout is tricky, traders usually determine it by measuring the distance between the two trend lines from the point where it breaks down and book profits when price hits 50. -60% of that distance.
A bearish breakout risks putting SOL price on track to nearly $40 in the coming weeks.
A Setback Scenario
On the other hand, SOL’s bearish megaphone setup might not reach its breakout target as its price remains above a flurry of concrete support levels.
These levels include the 50-week exponential moving average of the SOL (50-week EMA; the red wave) and an upward sloping trend line (the black line) that have served as accumulation zones for traders.
As a result, an early pullback from the 50-week EMA could invalidate the bullhorn pattern scenario.
Suppose the price breaks below the 50-week EMA, only to look for a bounce off the rising trend line support. In that case, it could confirm the presence of a “rising wedge” or “bear flag” setup in conjunction with the upper trendline of the megaphone 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 trend lines (around $40) and subtracting it from the potential breakout point near $100.
Meanwhile, the downside target of the bear flag is near $30 after calculating the height of its previous uptrend (around $60) and subtracting it from the potential breakout point near $90.
Update: SOL Predictions
Google trends have been one the most important indicators for gauging market sentiment. Solana has been trending lower for most of the week. Solana’s all-time high was $260.06, which hit in November 2021. However, since then Solana’s price has declined and currently, it is trading below $100.
In 2022, as per the latest prediction, Solana could be worth $150 by the end of December. The price quoted is an average of four different platforms.
Wallet Investors predicts Solana Worth in 2022 to be $234 by the end of 2022. In comparison, TechNewsLeader predicts the price of Solana to be $112 by the end of December 2022.
By Audy Castaneda
