This weekend saw a rally in the Solana (SOL) market as its price declined below the $90 level from the February 21 high of $96. In doing so, SOL price technicals are now risking a classic bearish reversal setup.
Solana costs $60. risk of falling
Dubbed head-and-shoulders (H&S), technical patterns emerge when price forms three peaks in a row above a common support level (called the neckline). As it usually turns out, the middle peak of the pattern, called the “head”, is longer than the other two peaks, called the left and right shoulders, which are of equal height.
The H&S pattern sends prices lower – at a length equal to the maximum distance between the head and neckline – once they are decisively broken below its neckline. As a result, Solana, which has been forming a similar technical formation recently, runs the risk of slipping to $60, or around 30%.
Interestingly, the downside target of H&S, near $60, also served as support in August 2021, just before Solana price rebounded to all-time highs above $250.
Bear flag increases downside risk
The risks of Solana undergoing another major sell-off period are also increasing due to a technical pattern known as the “bear flag”.
RELATED: Down Next? Solana paints its first ‘death cross’ as SOL loses 50% in January
Notably, SOL price is breaking out of a bearish continuation setup. In doing so, it now risks falling to the length of its previous downtrend, which is called a “flagpole” when measured from the point of the breakout, as shown in the chart below.
As a result, SOL’s bear flag breakout risks sending its price down to $60 or lower, similar to an H&S pattern.
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