The head and shoulders pattern on Solana’s daily chart sets a $70 target for $SOL, but the current market-wide sell-off could see prices slip even further.
At the center of the ongoing crypto market decline is the U.S. Federal Reserve'sto unwind its $120 billion a month asset purchasing program followed by three or more interest rate hikes spread throughout 2022.
The central bank's loose monetary policies had assisted in pumping the crypto market's valuation from $128 billion since March 2020 to as high as $3 trillion in Nov. 2021. Therefore, the evidence of tapering has been influencing investors to limit their exposure in over-pumped markets, including Solana, which had gained nearly 12,500% since March 2020.
As a result, if the crypto market continues declining in the sessions ahead, SOL will also be at risk of validating its head and shoulders setup.While SOL's longer timeframe chart leans toward a prolonged bearish setup, its short-term outlook looks comparatively bullish.SOL/USD daily price chart. Source: TradingView
That is primarily due to two factors. First, SOL price has fallen to a critical support level of $116 that was instrumental in limiting its downside attempts in September 2021. And second, its daily relative strength index dropped to below 30 — a classic buy signal. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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