Solana will only have one breakdown from a 40% slide in June - here's the reason

Solana will only have one breakdown from a 40% slide in June – here’s the reason – Mail Bonus

Solana (SOL) is nearing a decisive moment as it moves towards the top of its dominant “descending triangle” pattern.

40% price reduction installation SOL

In particular, SOL’s prices have been merging within a range defined by declining directional resistance and horizontal streamlined support, which appears to be a declining triangle – a continuum of directional trends.

As a result, as SOL has been declining, falling by 85% from its November 2021 high of $ 267, the chances of breaking below the triangle range are higher.

As a rule of technical analysis, a breakdown entry could follow with the formation of a descending triangle until the price has fallen by as much as the maximum height of the triangle. This puts SOL’s flexible price target at $ 22.50 in June, down 40% from today’s price.

SOL / USD daily price chart with breakdown setup of “descending triangle”. Source: TradingView

But not all declining triangles lead to failure, according to a study by the Samurai Trading Academy. In particular, the set-up of a descending triangle is likely to reach its profit target of 7 out of 10, based on the history of the pattern.

So it leaves SOL with about a 30% chance of avoiding failure and rebounds.

Solana’s rejection scenario

Falling triangles that form during downturns but still lead to price changes usually mark the bottom of the asset cycle.

Suppose the SOL stays strong above the horizontal directional support of the triangle. Then the SOL / USD pair could break over the declining trend line resistance of the structure and rise by as much as its maximum height, which sets the target of $ 65, up by 72% from today’s price.

SOL / USD daily price chart with decreasing triangle layout. Source: TradingView

The declining triangle’s profit target also coincides with the 50-day exponential moving average of SOL (50-day EMA; red wave) near $ 59.

At the same time, the daily relative strength index of the SOL (RSI), which has been reversing from its sales limit of 30 since 12 May, also increases the outlook for the symbol.

Solana TVL decreases by 75% from the maximum

At the same time, Solana’s fundamentals are mixed up.

As a blockchain network, it had performed poorly in recent months due to back-up disruptions. Although the total value locked in (TVL) inside Solana’s smart contracts has fallen to 3.69 billion dollars, which is a 75% decrease from the record high in December 2021, 14.83 billion dollars, data from Defi Llama show.

Solana TVL’s performance history. Source: Defi Llama

On the bright side, Solana experienced sustained growth in Internet usage, developer activity, Internet infrastructure and overall ecosystems in the first quarter of 2022, according to a study written by James Trautman, a researcher at the US cryptocurrency company Messari.

Brot:

“Several factors contributed to the results of the first quarter, including the continued growth of new NFT and NFT markets, the diversity of TVL, UX improvements and new applications in several sectors outside DeFi.

Related: Is Solana a “buy” with a SOL price of 10 months minimum and down by 85% from maximum?

On June 8, Solana’s venture capital fund launched a $ 100 million investment and support fund to support its blockchain-based products in South Korea, a country where the cryptocurrency sector is damaged by the recent collapse of Terra, a $ 40 billion algorithmic stablecoin project.

The decision aims to attract developers who want to move their projects from Terra to Solana, which could lead to greater demand for SOL.

The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.