Solana price action might see a 32% correction as tail risks bite back

Solana (SOL) price action was on the cusp of piercing a hole in the bearish triangle yesterday after a relief rally of four consecutive days took place. Instead, overnight headlines have shifted the balance from risk to risk-off. With markets on edge and nervous with the threat of the possible use of nuclear weapons by Russia and a tail risk from the meeting between Xi and Biden, investors are looking to keep their powder dry for the next week and instead enjoy the early spring sun today.

Solana price action at risk of a drop below $60.00

Solana price action is at risk of a significant drop as bears use a window of opportunity and a false sense of relief among bulls to provide a massive correction to SOL price action. This week, the relief rally hit a curb against the descending side of a bearish triangle. Bears were more than happy to use this opportunity to get in, helped by headwinds that emerged overnight from dire rhetoric on the Ukrainian situation and more negative headlines on lockdowns in China. 

SOL price action is set to shed 13% as under these circumstances bulls are in no condition to turn price action back up. Expect a drop back towards $75.34 and the triangle baseline, as well as the monthly S1 support and the low of February 24 – thus making it a significant level. A break below could trigger a rapid sell off towards $58.84, which would be a 32% fall from the current level today.

SOL/USD daily chart

Should there come a turnaround over the weekend with some progress in peace talks, expect to see a quick retest on that sloping side near $90.00. The $95.00 handle will prove to be an issue with the 55-day Simple Moving Average coming in from above.  Five dollars above there, the $100 level coincides with the monthly pivot and will probably halt any further uptrend as the past two discussed levels will weigh on profit-taking and take away some of the steam in the rally.