At least two technical indicators show that Solana (SOL) could rebound sharply in June, even after SOL/USD is down 78.5% YtD.

SOL price is close to breaking out of the bullish wedge

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First, Solana has been drawing a falling wedge since May, as evidenced by its fluctuations within two descending, converging trend lines. Traditional analysts view falling wedges as bullish reversal patterns, meaning they resolve after price breaks above their upper trendlines.

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As a rule of technical analysis, the profit target of a falling wedge is measured after adding the maximum distance between its upper and lower trend lines to the breakout point. So depending on the breakout level of SOL, its price will rise by about $20 as shown below.

SOL/USD daily chart with rising wedge breakout setup. Source: Trading View
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This puts a price target for SOL at $58 as measured from the current price, or about 35% higher. But if the price retreats after testing the upper trend line of the wedge and continues to fluctuate within its range, the SOL profit target will continue to decline.

The Solana token could rise to at least $44 after breaking out of the wedge pattern.

bullish divergence

Additional upside signals for Solana come from the growing gap between its price and momentum trends.

In particular, SOL’s recent downward moves are accompanied by an upward correction in its daily Relative Price Index (RSI), a momentum oscillator that defines overbought (>70) and oversold (>70) assets.

Daily SOL/USD price chart with price-momentum divergence. Source: Trading View

This situation, also known as a bullish divergence, shows that the bears are losing control and that the bulls are taking over the market again.

Solana still faces bear risks

Financial market veteran Tom Bulkowski believes However, falling wedges are poor bullish indicators with a higher breakeven of 26%. Meanwhile, there is only a 64% chance that the falling wedge will hit its profit target, leaving Solana free to continue the downtrend.

Solana developers are fixing bugs, hoping to prevent further crashes

Bulkovsky says:

“The only option that works well is a downside breakout in a bear market.”

The fundamentals around Solana agree with the negative outlook. They include a hawkish Fed and the negative impact of its tightening on riskier assets, including cryptocurrencies and equities.

As a result, SOL could decline due to these macro risks, with its next potential downside target in the $19-$25 region as shown below.

Weekly SOL/USD price chart. Source: Trading View

This range played an important role as support for the March-July 2021 session.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cryptooshala.com. Every investment and trading step involves risk, you should do your own research when making a decision.