The price of Solana (SOL) may rise by over 45% in the coming weeks as the cryptocurrency intends to complete a double-bottom chart pattern against the U.S. dollar.
A $150 SOL ahead?
Double-bottoms typically appear at the end of a downtrend when the price falls to a low, rebounds, and returns to the level near the previous low. With bears unable to push the price to a newer low, the selling sentiment exhausts, leading to a sharp upside retracement and a breakout move afterward.
SOL has been somewhat painting a similar pattern since Jan. 24, especially after extending its rebound move by rising 25% week-to-date (WTD) to reach above $100.
Additionally, a visible bullish divergence between the Solana token’s price and relative strength index (RSI) trends indicates a high probability of a double-bottom breakout.
SOL/USD daily price chart featuring double bottom and bullish divergence setups. Source: TradingView
Nonetheless, a bullish confirmation might come if SOL’s price breaks above the double-bottom neckline near $120 with a rise in trading volume. As it happens, the Solana token’s upside target could be at length equal to the maximum distance between the double-bottom pattern’s lowest point and its neckline.
That would put SOL en route to at least $150, with a possibility of continuing the bullish move toward $170, marked in red in the chart above.
Bull trap risks
As double-bottom envisioned SOL at $150 or above, popular market analyst “Capo” warned about a potential bull trap in the Solana market, noting that altcoins, on the whole, would resume their downtrends.
The pseudonymous analyst presented $120, the double-bottom neckline, as a solid resistance level that would most likely limit SOL’s ongoing upside retracement. He also applied the popular Elliott Wave Theory to hint about the beginning of Solana’s next bearish wave cycle, as tagged with “c” in the chart below.
SOL/USD daily price chart. Source: Capo, TradingView
“It’s impossible to me to be bullish here, after the break of all the bullish MS + correctives moves to the upside,” Capo said on March 1, adding:
“You can enjoy the LTF pumps while they last, but don’t get too comfy.”
The bearish outlook lined up with a CoinShares report published last week showed most altcoin-based investment vehicles witnessing negative investor sentiment, including Binance Coin (BNB), Polkadot (DOT), Cardano (ADA), Ripple (XRP), and Litecoin (LTC).
Flow by asset in the week ending Feb. 25. Source: Bloomberg, CoinShares
Solana also suffered as the week ending Feb. 25 saw SOL investment products losing $2.6 million in capital outflows.
In contrast, all the digital asset investment products combined attracted $36 million in the same period, with multi-asset portfolios injecting the highest capital — of $14 million, followed by Bitcoin’s 17.3 million.
Source: Cointelegraph
