Solana (SOL) appears poised for a significant upward surge in March, based on a combination of technical and fundamental indicators.
There is a potential breakout of a “bull flag” pattern in SOL’s price as of January 18. Bull flags are patterns that indicate a continuation of bullish momentum, characterized by the price moving within a downward-sloping channel (flag) after a strong upward move (flagpole). These patterns typically resolve with a breakout above the upper trendline of the channel, resulting in a price increase equivalent to the height of the flagpole. In this case, Solana is targeting a breakout above the upper trendline of its flag towards $194, representing an approximately 80% increase from current price levels by March.
However, if there is a pullback from the upper trendline, SOL’s price could decline towards its lower trendline around $80. Nevertheless, there may be some accumulation and sideways price action around the 50-day exponential moving average (50-day EMA) near $87, which has historically served as a strong support zone. As long as the price remains within the flag range, the possibility of a breakout remains intact.
The recent approval of spot Bitcoin exchange-traded funds (ETFs) on January 11 has raised hopes within the industry that other cryptocurrencies, including Solana, could also receive approval for spot ETFs in the future. Franklin Templeton, a trillion-dollar asset management firm, added fuel to the speculation of a Solana ETF by praising the blockchain for its achievements in decentralized finance, infrastructure, non-fungible token innovation, and meme coins. The company already offers a spot Bitcoin ETF under the ticker (EZBC). The anticipation of a Solana ETF could potentially trigger a surge in SOL’s price, similar to the rally Bitcoin experienced prior to its ETF approval.
Furthermore, expectations of a dovish Federal Reserve could further drive Solana prices higher 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 tend to weaken the U.S. dollar as yields on dollar-denominated assets decrease. Since Solana is often valued against the dollar, it can gain value as the dollar weakens.
The technical setup of the U.S. Dollar Index (DXY) suggests a period of decline in the coming days. The index has been forming a rising wedge pattern since December 2023, with a downside target between 101.50 and 102.25, depending on the breakdown point. Solana’s consistent inverse correlation with the U.S. dollar should further enhance the likelihood of a major rally in 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.