Solana (SOL) appears poised for a significant upward movement in March, based on a combination of technical and fundamental indicators.
There is a possibility of a breakout in SOL’s price, as of January 18, as it tests the upper trendline of what appears to be a bull flag pattern. Bull flags are patterns of bullish continuation characterized by the price moving within a downward-sloping channel (flag) after a strong upward movement (flagpole). Typically, these patterns resolve when the price breaks above the upper trendline of the channel and rises by a height similar to that of the flagpole. If this breakout occurs, Solana could potentially reach $194 by March, representing an increase of approximately 80% from its current price levels.
On the other hand, if there is a pullback from the upper trendline, SOL’s price could decline towards the lower trendline around $80. However, it is possible that the cryptocurrency may experience some accumulation and sideways price action around its 50-day exponential moving average (50-day EMA) near $87, which has acted as a long-term support zone. As long as SOL stays within the range of the flag pattern, the possibility of a breakout remains intact.
The buzz surrounding a Solana ETF has also contributed to the positive sentiment around the cryptocurrency. With the approval of spot Bitcoin ETFs on January 11, there is hope within the industry that other cryptocurrencies, including Solana, could also receive approval for a spot ETF in the future. Franklin Templeton, a trillion-dollar asset management firm, has further fueled the excitement for a Solana ETF by praising the blockchain for its advancements in decentralized finance, infrastructure, nonfungible token innovation, and memecoins. The company already offers a spot Bitcoin ETF product under the ticker EZBC. The anticipation of a spot Solana ETF could potentially trigger a surge in SOL’s price, similar to the rally seen in Bitcoin before its ETF approval.
Furthermore, expectations of a dovish Federal Reserve could provide additional support for Solana’s price in the coming months. The CME’s Fed futures fund rate projections indicate a 59.5% probability of a 25 basis point interest rate cut in the United States by March 2024. Lower interest rates often lead to a weaker U.S. dollar as yields on dollar-denominated assets decrease. Cryptocurrencies like Solana, which are frequently priced against the dollar, tend to increase in value when the dollar weakens.
The technical setup of the U.S. Dollar Index (DXY) suggests a period of sell-off in the coming days. Since December 2023, it has been forming a rising wedge pattern, with a downside target ranging between 101.50 and 102.25, depending on the breakdown point. Solana’s persistent inverse correlation with the U.S. dollar should further enhance the likelihood of a major rally for SOL by March.
It is important to note that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.