The cryptocurrency market is currently experiencing significant selling pressure, with both Bitcoin (BTC) and Ethereum (ETH) seeing declines of over 5% in the last 24 hours. This market correction has led to over $1.38 billion in liquidations across the market, with long positions being particularly affected, losing more than $1.21 billion in a single day.
This heightened volatility has impacted major altcoins, including the Layer-1 token Solana (SOL), which has dropped by more than 6%. However, technical analysis of Solana's chart indicates a pattern that suggests SOL may be preparing for a potential rebound in the upcoming trading sessions.
Falling Wedge Pattern in Play
On the daily chart, Solana is currently exhibiting a falling wedge pattern. This is a recognized bullish chart formation that typically emerges when selling pressure begins to diminish and the price compresses within a narrowing range.
The recent market downturn brought Solana's price down to the lower boundary of the wedge, approximately at $135.76. This level has historically acted as a strong support zone. Since reaching this point, SOL has shown signs of recovery, moving back towards $142.34, which suggests that buyers are actively defending this price level.
The price action observed over the past several weeks shows that each instance of the price touching the wedge's lower boundary has resulted in an immediate upward movement. This recurring behavior often indicates accumulation and a potential exhaustion of sellers.
What's Next for SOL?
If Solana manages to maintain its support around the current region and continues to hold strength along the lower trendline of the falling wedge, upward momentum could begin to build. The next significant price level to monitor is the $156 region. This area coincides with the upper boundary of the wedge and has historically presented resistance.
A confirmed breakout above the $156 resistance level could lead to a substantial shift in momentum favoring buyers. Such a move might pave the way for a potential advance towards the $273 area, which is identified as the next major resistance zone on the chart.
Conversely, a failure to defend the support established by the falling wedge would serve as a cautionary signal. A breakdown below this support level could expose SOL to increased downward pressure, potentially driving the price towards the $126 level, where the next significant support is located.