Is Solana facing a catastrophic breakout from an inside-bar pattern?

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Is Solana facing a catastrophic breakout from an inside-bar pattern?

By Motiur Rahman - min read

It’s an indecision moment as Solana trades at an oversold level of $13. The cryptocurrency has formed multiple pin bars at the level, indicating indecision in the market. A potential breakout to the downside could see SOL claim a single-digit price.

CoinMarketCap data shows that SOL has lost more than 25% in a week. The loss is among the highest among the cryptocurrencies in the top 100 bracket. Concerns that the Solana ecosystem has a huge exposure to the collapsed FTX and Alameda have been fueling the bear market. Alameda is believed to hold 50.5 million SOL worth $708 million. Amid the exposure, Solana founder Anatoly Yakovenko has maintained that the investment is unaffected.

SOL remains under the mercy of bears, who are increasingly active at the $13 price level. Here is the price outlook:

SOL is under pressure at $13 even as the price hits oversold levels

Technically, SOL is creating a support zone at $13. However, a likely bullish reversal looks unlikely as the token trades with weakening momentum. The formation of multiple inside bars at the crucial level suggests that buyers and sellers match the effort. 

SOL/USD Chart by TradingView

Turning to the RSI shows that SOL is oversold. An attempted recovery has been muted, with a further slip of the RSI reading to 29. The MACD indicator underlines a weak and worsening momentum.

Which way is SOL?

An inside-bar pattern can break on either side. An upside breakout will confirm a bullish reversal for SOL. However, a quick sell-off for SOL could occur if the breakout occurs to the downside. In such a case, the SOL price could touch $10 or below. 

With the weak sentiment, a bearish breakout carries a higher chance. Investors should be cautious about buying SOL at this level.

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