Solana has formed a Head and Shoulders pattern with breakdown confirmation. Confirmation came with first daily price candle to open below the H&S neckline. Once there is a breakdown confirmation of a H&S pattern calculations can be made to determine lower price points to look for potential levels of support, or targets to buy in at.
The first measurement needed is the distance between the highest point in price made inside of the head pattern and the point of the neckline directly below the high. In Solana’s case, the high of the head formation was roughly $260 on the 6th of November and the neckline directly below it was at roughly $135 on the same day. Now take the height and subtract the neckline $260 - $135 = $125. This is the breakdown measurement.
The next data point needed is the opening price of the first candle to open below the neckline of the H&S pattern. This candle and price point are used because it is the candle that confirmed the H&S pattern completion and breakdown, and the opening price is the first price to open below the neckline in the breakdown. In this Solana example, the first candle to open below the neckline was on January 6th and the opening price was $154. Now that we have that opening price, we can subtract the first head and neckline measurement from it: $154 - $125 = $29. This would be the ultimate price target if the H&S pattern plays out 100% textbook style.
H&S patterns have a 50% success rate of seeing price retrace the entire head/neckline measurement so in order to compensate for that statistic, you multiply the head/neckline measurement by 50%. $125 * .50 = $62.5. Now subtract that number from the opening price of the first candle to open below the neckline to get the more probably retracement price target: $154-$26.5 = $91.5.
For now Solana is holding above the 200-day price average(200sma) which is historically a strong support level for most assets, but should the crypto sector continue to see weakness expect the 200sma to fail as support for Solana. Price is below all short-term averages with all short-term average in bearish crosses which is bearish for price as well.
The lower PPO, ADX and TDI indicators are also all showing bearish trend and momentum behind price, in both the short and intermediate-term.
The first measurement needed is the distance between the highest point in price made inside of the head pattern and the point of the neckline directly below the high. In Solana’s case, the high of the head formation was roughly $260 on the 6th of November and the neckline directly below it was at roughly $135 on the same day. Now take the height and subtract the neckline $260 - $135 = $125. This is the breakdown measurement.
The next data point needed is the opening price of the first candle to open below the neckline of the H&S pattern. This candle and price point are used because it is the candle that confirmed the H&S pattern completion and breakdown, and the opening price is the first price to open below the neckline in the breakdown. In this Solana example, the first candle to open below the neckline was on January 6th and the opening price was $154. Now that we have that opening price, we can subtract the first head and neckline measurement from it: $154 - $125 = $29. This would be the ultimate price target if the H&S pattern plays out 100% textbook style.
H&S patterns have a 50% success rate of seeing price retrace the entire head/neckline measurement so in order to compensate for that statistic, you multiply the head/neckline measurement by 50%. $125 * .50 = $62.5. Now subtract that number from the opening price of the first candle to open below the neckline to get the more probably retracement price target: $154-$26.5 = $91.5.
For now Solana is holding above the 200-day price average(200sma) which is historically a strong support level for most assets, but should the crypto sector continue to see weakness expect the 200sma to fail as support for Solana. Price is below all short-term averages with all short-term average in bearish crosses which is bearish for price as well.
The lower PPO, ADX and TDI indicators are also all showing bearish trend and momentum behind price, in both the short and intermediate-term.