Solana price enters correction territory after 80% monthly gains
Solana (SOL) ticked modestly lower on July 20 after testing a critical technical resistance, suggesting further pullback moves in the coming weeks.
SOL's price decreased by over 4% to $44 after failing to breach a multi-week ascending trendline resistance. Interestingly, this resistance level comes as a part of what appears to be a bearish continuation pattern dubbed the "bear flag."
A previous test of the same resistance trendline in late June had preceded a 30%-plus price drop, illustrating a higher distribution sentiment among SOL traders near the level. Therefore, the latest pullback from the same range could lead to an extended downside retracement.
Meanwhile, the bear flag's lower trendline has been capping SOL's sharp pullback moves. As a result, SOL's extended correction scenario could have its price hit the support level, now near $35.40 — a 20% drop from current price levels.
Additionally, a decisive close below the lower trendline would risk triggering the bear flag breakdown setup, wherein the price falls by as much as the height of the downtrend (called "flagpole") that preceded the flag's formation.
That puts SOL on the road to levels near $21 by September, down over 50% from today's price.
The bear flag setup appears after SOL's 80%-plus price rally since June 14, primarily driven by a similar recovery across the crypto market.
For instance, Ether (ETH), Solana's top rival in the smart contract space, has risen over 85% more than a month after bottoming out locally at $880. Similarly, Bitcoin (BTC) is up 35% in the same period.
Independent market analyst Altcoin Sherpa sees SOL's price rising to the $60-$80 area in 2022 if Bitcoin continues to climb.
Conversely, Andrey Diyakono, chief commercial officer at
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