Solana (SOL) has created a double bottom pattern inside a crucial horizontal support area, indicating that an upward move might soon follow.
Solana has been falling since reaching an all-time high price of $259.90 on Nov 6. So far, the downward move has led to a local low of $81 on Feb 22. Measuring from the all-time high price, this amounted to a decrease of 69%.
The low was made very close to the 0.786 Fib retracement support level at $76. This is the final support level prior to the August 2021 lows.
It’s crucial that SOL bottoms here in order for the bullish structure to remain intact.
SOL creates double bottom
Cryptocurrency trader @AltcoinSherpa tweeted a SOL chart, stating that the $80 area is likely to provide strong support.
Since the tweet, SOL has bounced at the $80 level and potentially initiated an upward trend.
The main reason for this is the creation of a double bottom, which is considered a bullish pattern. The double bottom has also been combined with bullish divergences in both the RSI and MACD. Such divergences very often precede bullish trend reversals.
Currently, SOL is still decreasing underneath a descending resistance line. A breakout from this line would likely take the price towards $149, which is the 0.382 Fib retracement resistance level and a horizontal resistance area.
Short-term movement
The two-hour chart shows that SOL has also been following a shorter-term descending resistance line since Feb 7. Currently, it’s in the process of making its third breakout attempt.
A breakout above this line could also cause a breakout from the longer-term descending resistance line.
Therefore, if a breakout occurs, it could be the catalyst for the beginning of a longer-term upward trend.
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