Solana’s Rising Wedge Breakdown Signals 18% Drop in August

Solana (SOL) is exhibiting bearish signals as it forms a rising wedge pattern on its daily chart, indicating a potential drop of up to 18% in August.

SOL Breaks Below Wedge’s Support Line

The rising wedge pattern, characterized by two upward-sloping, converging trendlines, is a bearish reversal indicator. It suggests a slowing of upward momentum, typically preceding a sharp decline once the price breaks below the wedge’s lower trendline.

Meanwhile, traditional analysts measure the rising wedge’s downside target by adding the maximum distance between the pattern’s upper and lower trendline to the breakdown point.

As of July 30, 2024, SOL’s price was around $177.50, having already tested and slightly broken below the wedge’s support.

This breakdown suggests that the bears are gaining control, potentially leading to declines toward $144.70, down about 18% from the current price levels. This level also coincides with SOL’s 0.236 Fibonacci retracement level.

However, the first significant target is around the 0.618 Fib level at $174. A sustained move below these levels could open the door to the 0.5 Fib level at $164.95, which aligns closely with the 50-day exponential moving average (50-day EMA; the blue wave) at around $160.

Is Solana Topping Out?

Solana’s long-term outlook looks skewed toward bulls due to the formation of a descending triangle pattern, a bullish continuation pattern when formed during an uptrend.

The descending triangle pattern is characterized by a series of lower highs and a horizontal support level, which together form a triangle. In an uptrend, this pattern often signals a continuation of the bullish momentum once the price breaks above the upper trendline.

As of July 31, SOL’s price had entered the breakout stage of its descending triangle pattern.

SOL/USD daily price chart. Source: TradingViewThe immediate target for SOL lies around $250. This target aligns with the measured move technique, which projects a distance equal to the height of the triangle added to the breakout point.