Solana (SOL) Cup-and-Handle Pattern Hints at Breakout Toward $3,800

NAIROBI (CoinChapter.com)— Solana (SOL) traders are closely watching a potential cup-and-handle pattern forming on the weekly chart

NAIROBI (CoinChapter.com) – Solana (SOL) traders are closely following a potential cup-and-handle pattern forming on the weekly chart, which, if it plays out, could lead to a surprising surge towards $3,800.

Crypto analyst Ali Martinez highlighted the possibility as he observed Solana's recent price movements. In a post on X, formerly Twitter, Martinez focused on the promising long-term potential despite Solana's recent drop to $112, its lowest point in nearly a year.

"Solana forming a classic cup and handle pattern on the weekly chart. If the structure plays out, we could see some serious price action with an explosive move towards the $3,800 level."

But in the short term, there is still risk of further downside as we approach a death cross on the chart.pic.today/x8R7q9z

— Ali Martinez (@ali_martinez_) March 10, 2024

As seen on Friday, August 11

The 20-day EMA stands as resistance at $141.82, while the RSI at 37.20 suggests that the altcoin is approaching oversold conditions.

For traders seeking a bounce, a retest of $141.82 could serve as an early reversal signal.

However, in the short term, Solana's price action is coming under pressure despite the long-term bullish cup-and-handle formation. On March 12, a death cross formed as the 50-day moving average (166.77 USDT) crossed below the 200-day moving average (180.19 USDT). This bearish technical signal indicates potential further downside unless buyers step in.

As the chart below shows, SOL's price has been locked in a downward channel, struggling to reclaim lost ground. The altcoin dropped for five days in a row before finding temporary support at $112, its lowest level since early 2024.

If the price fails to hold support between $125 and $110, analysts from Benzinga warn of further downside with a potential move towards $80. But if bulls manage to defend the support zone, SOL could attempt to break above key resistance levels, including the 50% Fibonacci retracement level at $155.22 and the 61.8% level at $161.87.

The Relative Strength Index (RSI) is at 41.51, indicating that the selling pressure is easing. The RSI measures the magnitude of price changes to evaluate overbought or oversold conditions. An RSI reading below 30 suggests that a stock or cryptocurrency is oversold and may be due for a rebound.

The lower Relative Strength Index (RSI) on the smaller time frame is also placing some pressure on the price to move up. The RSI is currently at 37.20, which is still in the oversold territory. As the RSI moves above the 40s, it could attract more buyers to the market, potentially leading to a price increase.

As the price approaches the upper boundary of the channel, it could experience increased resistance from sellers. However, if the buyers manage to push the price above the channel, it could signal a strong bullish move.

The optimists among us might be thinking that the lower Relative Strength Index (RSI) on the smaller time frame is also placing some pressure on the price to move up. The RSI is currently at 37.20, which is still in the oversold territory. As the RSI moves above the 40s, it could attract more buyers to the market, potentially leading to a price increase.

The pessimists might be thinking that the price is approaching the upper boundary of the channel, which could be met with resistance from sellers. However, if the buyers manage to push the price above the channel, it could signal a strong bullish move.

The fib levels are also something to keep an eye on. The price is currently trading above the 38.2% fib level at $110.21, and if it manages to break above the 50% fib level at $155.22, it could continue to rise towards the 61.8% fib level at $161.87.

Overall, the technical picture for Solana remains mixed. While the long-term trends suggest that the price could continue to rise, the short-term trends indicate that there is still some risk of further downside.

The optimists among us might be thinking that Solana is a promising investment opportunity, especially for those with a high-risk tolerance and a long-term time horizon.

The pessimists might be thinking that Solana is a risky investment, and investors could lose money