[SOLUSDT] Could it drop to $15?
My latest analysis of SOL/USDT points to a potential distribution phase, a precursor to a shift in market dynamics that could significantly impact price action. While the asset has been on an upward trajectory, forming a notable ascending broadening wedge, this pattern typically reflects growing market indecision and can lead to increased volatility.
The broadening wedge, while often a continuation pattern, can also foreshadow a reversal when accompanied by other bearish indicators. Here, the resistance struggles and the volume divergence are crucial — they hint at a waning bullish force, which could mean that the sellers are poised to take the upper hand.
What draws my focus is the emerging downward channel within this broadening formation, marked by a series of lower highs and lower lows. This channel suggests that if distribution does take hold, we could be bracing for a more substantial retreat in SOL's price.
Although I am not asserting that this scenario will definitively play out, should the distribution and the downward channel follow through, the target for this pattern points to a stark decrease, potentially around the $15 mark. This level would represent a significant pullback from current prices and should be on every trader's radar. The failure to breakeven rate for a ABW is about 31%. Also this pattern is one of the worst performers for downwards breakouts, which means it's drop could lead to potentially massive bullish movement.
As with all analyses, this is not a certainty but a possibility based on the patterns developing on the chart. It's an observation meant to prepare traders for potential outcomes, allowing for proactive strategy adjustments and risk management.
Ascending Broadening Wedge Breakdown:
The following information was obtained from thepattersite.com
Ascending Broadening Wedge: Overview
The ascending broadening wedge is a chart pattern that tends to disappear in a bear market. Most often, you'll find them in a bull market with a downward breakout. For more information see pages 81 to 97 of the book Encyclopedia of Chart Patterns, Second Edition and read the following...
Ascending Broadening Wedge: Important Bull Market Results
Overall performance rank for up/down breakouts (1 is best): 23 out of 39/33 out of 36
Break even failure rate for up/down breakouts: 15%/31%
Average rise/decline: 41%/12%
Throwback/pullback rate: 68%/62%
Percentage meeting price target for up/down breakouts: 61%/71%
The above numbers are based on 690 perfect trades. See the glossary for definitions.
Ascending Broadening Wedge: Identification Guidelines
Characteristic
Price trend, Can be up or down leading to the pattern
Shape, A megaphone tilted up.
Trendlines, Both trendlines slope upward. The top one slopes more steeply than the bottom one.
Touches, At least three peaks and three valleys should touch their respective trendline.
Volume, Irregular but trends upward 66% to 67% of the time.
Breakout, Downward 52% of the time.
The broadening wedge, while often a continuation pattern, can also foreshadow a reversal when accompanied by other bearish indicators. Here, the resistance struggles and the volume divergence are crucial — they hint at a waning bullish force, which could mean that the sellers are poised to take the upper hand.
What draws my focus is the emerging downward channel within this broadening formation, marked by a series of lower highs and lower lows. This channel suggests that if distribution does take hold, we could be bracing for a more substantial retreat in SOL's price.
Although I am not asserting that this scenario will definitively play out, should the distribution and the downward channel follow through, the target for this pattern points to a stark decrease, potentially around the $15 mark. This level would represent a significant pullback from current prices and should be on every trader's radar. The failure to breakeven rate for a ABW is about 31%. Also this pattern is one of the worst performers for downwards breakouts, which means it's drop could lead to potentially massive bullish movement.
As with all analyses, this is not a certainty but a possibility based on the patterns developing on the chart. It's an observation meant to prepare traders for potential outcomes, allowing for proactive strategy adjustments and risk management.
Ascending Broadening Wedge Breakdown:
The following information was obtained from thepattersite.com
Ascending Broadening Wedge: Overview
The ascending broadening wedge is a chart pattern that tends to disappear in a bear market. Most often, you'll find them in a bull market with a downward breakout. For more information see pages 81 to 97 of the book Encyclopedia of Chart Patterns, Second Edition and read the following...
Ascending Broadening Wedge: Important Bull Market Results
Overall performance rank for up/down breakouts (1 is best): 23 out of 39/33 out of 36
Break even failure rate for up/down breakouts: 15%/31%
Average rise/decline: 41%/12%
Throwback/pullback rate: 68%/62%
Percentage meeting price target for up/down breakouts: 61%/71%
The above numbers are based on 690 perfect trades. See the glossary for definitions.
Ascending Broadening Wedge: Identification Guidelines
Characteristic
Price trend, Can be up or down leading to the pattern
Shape, A megaphone tilted up.
Trendlines, Both trendlines slope upward. The top one slopes more steeply than the bottom one.
Touches, At least three peaks and three valleys should touch their respective trendline.
Volume, Irregular but trends upward 66% to 67% of the time.
Breakout, Downward 52% of the time.