Solana bulls buy the dip but SOL upside potential is capped at $280

• Solana price dropped 9% during market-wide sell-offs in response to uncertainty involving the Evergrande fiasco.
• Buyers stepped in and rallied Solana back above the daily Tenkan-Sen.
• Upside potential is limited while downside risks remain.

Solana price was at more risk of a catastrophic move lower during Wednesday’s selling pressure than most cryptocurrencies. It is a testament to Solana’s strength and bullish sentiment that not only was the retracement limited, but Solana continued to trade near its all-time highs. Two trade possibilities are now present.

Solana bounces hard after market-wide sell-off, but the near-term direction is not clear

Solana price has a theoretical long setup with a buy stop order at $252.50, a stop loss at $242.50 and a profit target at $297.50. However, the entry has some conditions to trigger. At least a triple-top or split triple-top must form at $250 for the entry to become valid. The reason for this is due to the extended column of Xs in the current X column. Therefore, a pullback is necessary to confirm that any breakout above $250 would likely be sustainable. Additionally, while the projected profit target is at $297.75, the psychological number of $300 will likely be the most likely to get hit.

SOL/USDT $2.50/3-box Reversal Point and Figure Chart

The long side of the trade will be invalidated if the current X-column hits the entry before a triple-top develops or if Solana price moves below $220.

On the short side of the market, a hypothetical short entry is developing based on a Pole Pattern. The short entry idea would be a sell stop order at the three-box reversal of the current X-column (currently at $230 at the time of publishing), a stop loss of four boxes and a projected profit target at $155 – but the downside profit may be limited to the support structure on the uptrend angle at $180.

SOL/USDT $5.00/3-box Reversal Point and Figure Chart

If Solana reaches the $300 value area, then the hypothetical short entry idea is invalidated.

 

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