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Key Takeaways
- Solana could enter a 41% downtrend after losing a vital interest zone.
- Avalanche could retrace to roughly $20 if it prints a close below $27.
- The Layer 1 assets must reclaim vital support to invalidate the pessimistic outlook.
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Solana and Avalanche look closer to defining the direction of their trends after breaking below vital support. Further selling pressure could lead both assets new yearly lows.
Solana and Avalanche Fall Under Pressure
Solana and Avalanche, two of the leading Layer 1 networks to rise to prominence in the 2021 bull run, have breached critical support areas while momentum for a significant price movement accelerates.
Solana endured a 44% correction between May 11 and May 12 and has since been locked in a tight trading range. SOL’s price action led to the formation of a symmetrical triangle on its four-hour chart. As the token approached the pattern’s apex, it built enough pressure for a spike in volatility.
Over the past few hours, Solana appears to have sliced through the $47.60 support level. If it prints a four-hour close below this price point, SOL could enter a 41% downswing toward $28.85. This target is determined by measuring the height of the triangle’s Y-axis and adding that distance downwards from the breakout point.
Likewise, Avalanche has dipped below the X-axis of a descending triangle formation that developed on its four-hour chart. This technical formation was created by the series of swing highs AVAX has made since May 11, which formed a descending trendline, while the swing lows developed a horizontal trendline around $28.
A sustained four-hour close below this vital support level could encourage traders to exit their position and increase the selling pressure behind AVAX. Under such circumstances, the Layer 1 token could dive toward $19.80.
A decisive four-hour close below the key support levels would provide more credence to the bearish thesis, particularly as the cryptocurrency market has endured a prolonged stagnation period. If market participants were to take advantage of the recent downswing to buy the dip, prices could recover promptly. Still, Solana would likely have to break through $53 to have a chance at advancing to $75.50, and Avalanche would need to reclaim $32 as support to advance toward $39.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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This article first appeared at Crypto Briefing
