On the one-week chart for Solana, a head-and-shoulders reversal pattern has developed. A breakthrough from this technical pattern foretold an 88% drop for SOL.
What's happening?
If the cryptocurrency converts the $32.91 barrier into a support floor on the weekly time scale, the bearish view will be invalidated. In the past 48 hours, the Solana price (1) has had a sharp drop that has caused it to go below a few important levels. This event has sparked a multi-year pessimistic forecast that might drive SOL to single-digit levels.
The recent events between Binance and FTX CEOs, Changpeng Zhao (CZ) and Sam Bankman-Fried (SBF), respectively, are the primary cause of this volatility and extreme bearishness. The FTX exchange had significant withdrawals and a liquidity crisis following Coindesk's first story and CZ's remarks; as a result, the two industry titans ultimately agreed to a "strategic transaction." Although Binance is buying FTX, the specifics of the transactions are kept under wraps.
Price of solana at a pivotal moment
Between April 2021 and August 22 of the same year, Solana Price built up a head-and-shoulders configuration. Three peaks make up this complex structure, each with the appearance of a head and two shoulders. This event signals the conclusion of an upward trend and the beginning of a downward trend. The neckline, which links the lowest points of the pattern, and the highest point of the head are measured to determine the setup's 88% target.
It's interesting to see that the volatility in the second week of November caused Solana's price to drop 36% and break below the neckline. While the Solana price situation appears dire, the negative argument might be refuted if SOL bulls can move the price over $32.91. A weekly candlestick close above this level, which has seen the largest amount of trading since April 2020, will reverse the negative view for SOL. A situation like this makes it possible for the Solana price to rise and retest the $47.45 barrier. The objective is $3.75 when the 88% downswing is added to the breakout point at $32.18. This analysis is speculative. The $4.42 support level may stop this decline in its tracks.
Investors should prepare for a little rally in the future that might raise the price of Solana to $25. With $15.9 as the goal, this location is a decent opportunity to start another short position. The volume profile bulges out at this level, indicating the presence of buyers nearby. If $15.9 breaks down, there might be a sharp decline to the end price of $4.42.
