Trader Lays Out Bearish Scenario for Solana if History Repeats, Updates Outlook on Bitcoin and Dogecoin
A widely followed crypto analyst is warning that Ethereum (ETH) competitor Solana (SOL) could undergo a sudden market correction.
Pseudonymous crypto analyst Rekt Capital tells his 363,800 followers on the social media platform X that if SOL fails to flip a key level into support, it could follow a prior price pattern to the downside.
“SOL: if history repeats, Solana may experience some extreme volatility both to the upside beyond $42.86 (red) and if the rejection is strong, even downside volatility to as low as $30 (below purple box). Will history repeat? If it does, I’d be ready.”
Source: Rekt Capital/X
The trader warns that the longer SOL trades below the $42 range, the greater the probability of a deep correction.
“Solana already producing some upside wicks beyond ~$42.86. Continue to stay below this resistance and SOL could see a deeper pullback over time.”
Source: Rekt Capital/X
Looking at the trader’s chart, he seems to refer to SOL’s price action in early 2021 when Solana witnessed a deep pullback after failing to take out its resistance at around $42
Solana is trading for $39.56 at time of writing.
Next up, the trader says that Bitcoin (BTC) will likely continue to rally toward its diagonal resistance at around $42,000 before the halving. According to the trader, he expects BTC to retrace after hitting the diagonal resistance before turning it into support after the halving.
The halving, which is scheduled to take place in April 2024, is traditionally viewed as a bullish event as it slashes miners’ rewards in half.
Says Rekt Capital,
“Bitcoin may reject from the black trendline resistance prior to the halving (orange circle). But it will likely retest it as support after the halving (black circle).”
Source: Rekt Capital/X
Bitcoin is trading for $34,620 at time of writing.
Lastly, the trader weighs in on Dogecoin (DOGE). He says he is closely watching whether the memecoin can convincingly break out of a descending channel on the weekly chart.
“Really important [whether] this week’s ‘buy-the-dip’ behavior is enough to get DOGE above the channel top. Because previous weekly closes below the channel top followed by brief rebounds still preceded downside (orange)…
That ‘buy-the-dip’ behavior we saw yesterday is looking like relief under key resistance. However, there has been no strong DOGE rejection and downside continuation. The most important signal is a weekly close above the channel top to confirm a breakout.”
Source: Rekt Capital/X
Looking at the trader’s chart, he appears to be looking at DOGE to breach the top of the channel’s resistance at around $0.07.
DOGE is trading for $0.0681 at time of writing.
Generated Image: DALLE3
