Solana Gravestone Indicator Hints At Massive Selloff Ahead

A recent run-up in the Solana (SOL) market is showing signs of upside exhaustion as its price forms a Gravestone candlestick on the daily timeframe chart.

SOL Price Risks 20-25% Decline in Coming Weeks

The Gravestone doji forms when the opening, low, and closing prices are at or near the same level and have a long upper shadow. It indicates that buyers could push prices significantly higher during the trading session. However, by the end, sellers pushed prices back down to the opening level—a sign of weakening bullish momentum.

As of July 20, SOL’s price was forming a similar candlestick pattern after rising by circa 40% in the two weeks prior. Interestingly, the cryptocurrency’s Gravestone doji formation coincides with the resistance trendline of its prevailing descending triangle pattern, thus furthering its selloff risks in the coming weeks.

In addition, SOL’s daily relative strength index (RSI) reading is nearing its overbought threshold of 70, which typically precedes a correction or consolidation period.

That said, SOL’s price correction scenario may lead its price toward the support trendline of its descending triangle pattern. This downside target is around the $120-130 region, amounting to circa 20-25% declines by August.

Nonetheless, Solana may attempt a rebound move after testing its 50-day exponential moving average (50-day EMA; the red wave), akin to what it did in May 2024. A decisive rebound, which accompanies a strong rise in trading volumes, may shoot SOL’s price back toward the triangle’s resistance trendline—at around the $165-170 region.

Solana Long-Term Price Analysis

Despite its imminent correction risks, Solana’s long-term technical outlook is biased toward bulls thanks to the formation of a bull flag pattern on its weekly timeframe chart.

For the unversed: A bull flag pattern develops when the price consolidates lower inside a descending channel after undergoing a strong upside move. As a rule, it resolves when the price breaks above the channel’s upper trendline and rises by as much as the previous uptrend’s height.

Applying the same principle to the SOL/USD weekly chart, its upside target for 2024 comes to around $250.