Solana (SOL) is currently trading in negative territory as the broader cryptocurrency market experiences pressure over the past 48 hours. Investor sentiment has shifted towards caution once again, with Bitcoin (BTC) falling below the $90,000 mark and Ethereum (ETH) declining nearly 7% in the last 24 hours. This significant price drop has resulted in over $689 million in liquidations, with long positions accounting for approximately $629 million of the total.
Amidst this widespread market downturn, SOL has seen a decrease of over 5%. However, beneath the recent downward price action, Solana's daily chart is beginning to indicate a potential technical setup that could influence its future price movements.
Emerging Inverted Head and Shoulders Pattern
On the daily timeframe, Solana appears to be forming a potential inverted head and shoulders pattern, which is recognized as one of the more reliable bullish reversal structures when it is confirmed.
- •The left shoulder of the pattern was formed in late November, around the $123 price zone.
- •Subsequently, the price experienced a more significant sell-off, creating the head near $119, which marked a local capitulation low.
- •The most recent rejection from the neckline resistance zone, situated between $142 and $147, has pushed SOL's price lower again. The asset is now drifting back towards the $123 area, a movement that is shaping what could become the right shoulder of the pattern.
This developing structure suggests that sellers might be losing momentum after multiple attempts to drive the price lower, while buyers continue to defend the same demand zone.
Key Resistance Still Overhead
Despite the formation of this potential bullish pattern, SOL is still trading below its 50-day moving average, which is currently positioned near $132.65. This moving average has become a significant overhead resistance level and remains a critical area for buyers to reclaim. As long as SOL remains below this line, upward price movements may face challenges in gaining sustained momentum.
What’s Next for SOL?
If the inverted head and shoulders pattern continues to develop as anticipated, SOL could find support near the $123 region. This would complete the right shoulder and potentially set the stage for a price rebound. A successful push back above the 50-day moving average would serve as an early bullish signal and could pave the way for a renewed advance towards the neckline resistance zone, located between $142 and $147.
A decisive breakout above this neckline would confirm the pattern and could trigger a short-term bullish rally as momentum traders re-enter the market.
Conversely, the developing bullish setup remains vulnerable. A breakdown below the support zone between $126 and $121 would invalidate the inverted head and shoulders structure and increase the risk of further price depreciation.
Outlook
At present, Solana is positioned at a technical inflection point. While the prevailing weakness in the broader market continues to exert downward pressure on its price, the developing chart structure hints that selling pressure may be diminishing. Traders will be closely observing whether SOL can maintain support at the $123 level and reclaim the 50-day moving average—a move that could transform the current dip into a potential recovery opportunity.