Solana has dropped by more than 36% in the last three days, falling from a high of $75 to a recent low of $48. This steep correction pushed SOL to test the lower boundary of a parallel channel at $51.60, where it has been contained since September 2021.
It seems like Solana and Avalanche have reached a crucial demand wall. However, the lack of buyers at current price levels is quite concerning.
An analysis of the channel’s width shows that a decisive weekly close below the $51.60 support level could lead to a 50% correction. If this scenario happened, Solana could crumble under selling pressure and fall below $26 or even lower.
To recover some of its recent losses, the eighth-largest cryptocurrency by market cap must hold above the channel’s lower trendline at $51.60. Price history has shown that every time SOL has recovered from this support level, it has tagged the middle or upper boundary of the channel. Similar price action could lead to an increase to $70 or even $95.
Avalanche has also dropped significantly in the last three days. The Layer 1 token plummeted by over 50% after losing its $51.60 support level. AVAX’s weekly chart shows the steep downtrend as part of a bearish breakout from a head-and-shoulders pattern.
Though Avalanche has reached the $28 target presented by this bearish technical formation, it’s still unclear whether this token can eventually bounce back.
Because of the current market conditions, lower lows are expected. However, AVAX would have to print a weekly candlestick close below $27 before this could happen. Breaking through this vital demand zone may encourage further selling among market participants, leading to a drop to $17 or even $10.
On the other hand, Bulls would need to push Avalanche above $37 and maintain this level to invalidate the bearish outlook. Achieving such a difficult task may entice sidelined investors to return to the market, pushing AVAX to $51.