This Rare Zig-Zag Pattern Explains When Solana Sell-off Will End
Based on the Elliott Wave analysis, Solana's (SOL) sell-off is unfolding as a massive Zig-zag pattern. The cryptocurrency is showing an incomplete bearish sequence in the cycle from November 2021 all-time high, which calls for more downside.
Solana Zig-Zag Pattern
The Zig-Zag pattern is made of 3 big waves that can be subdivided into a 5-3-5 inner wave structure.
The current view suggests that the decline from the November 2021 peak to the January 2022 low is unfolding as a 5 wave impulsive structure, labeled wave A.
The pullback in wave B unfolded as a regular flat, which has a three-wave structure that ended with the April 2022 high. Down from the peak of wave B, the current wave C is in progress, which is running an incomplete 5 wave sequence.
Short-term, wave 3 is in progress, and once this ends, we can see a rally in wave 4 and another push lower to complete the five-wave sequence of bigger wave C.
Wave C and subsequently the entire sell-off from November 2021 peak can end anywhere between $32 and $10, which is the 0.618 and 0.786 Fibonacci extension levels of wave A measured against the peak of wave B.
Zig-Zag Pattern Explained
The Zig-Zag pattern is one of the three basic Elliott Wave patterns, alongside impulse and flat. It fits best in the A-B-C corrective wave structure.
The pattern can be either a three-wave impulse or a three-wave corrective structure. In both cases, the pattern is made of 3 big waves, and the three waves can be subdivided into a 5-3-5 inner wave structure.
Solana's price history
Solana (SOL) is one of the most promising blockchains for the deployment of decentralized finance (DeFi) solutions.
The cryptocurrency started with a series of new highs from March 2021 and made a new all-time high of $258 on November 2021. Then, the cryptocurrency started a massive sell-off that looks like a Zig-Zag structure.
Looking forward
The cryptocurrency is trading at $27.24 at the time of writing, and our short-term view is bearish. We are expecting a new low in the last leg of the five-wave sequence of the current wave 3.
Once wave 3 ends, we can see a corrective rally in wave 4, which is likely to end near the $32 resistance area. Down from there, wave 5 can end the entire sell-off from the November 2021 peak.
