As a seasoned crypto investor with a background in technical analysis, I find Van Lagen’s bearish outlook on Solana intriguing, particularly given his use of the Elliott Wave Theory. His assessment aligns with my own observation of the market trends, and the presence of bearish divergence on the weekly RSI adds credibility to his analysis.
As a researcher studying the cryptocurrency market, I’ve come across Gert van Lagen’s technical analysis of Solana (SOL), which paints an extremely bearish picture. According to his assessment, based on the Elliott Wave Theory, we can expect a significant price downturn for Solana in the near future. This theory is widely recognized and used to identify patterns and cycles in market price movements.
Why The Solana Price Could Crash
Van Lagen’s examination centers around Solana’s price history over the last few years. Based on his interpretation, the year 2021 represented the conclusion of a pure Elliott Wave trend for Solana, indicating the finish of its bullish phase. This upward trend is defined by a distinctive sequence of five waves, with the fifth wave serving as the peak move preceding a price reversal.
In the new year, Van Lagen’s assessment reveals the emergence of a bear market’s initial phase, labeled the A-wave, which is characterized by a clear five-subwave pattern in accordance with Elliott Wave Theory. The significance of these subwaves lies in their ability to mirror the market’s prevailing sentiment and psychology, suggesting that the downtrend may continue for an extended period.
In 2023, Van Lagen noted the emergence of a corrective rally, referred to as the B-wave, within the larger bear market trend. Like its counterpart, the A-wave, this B-wave consists of five subwaves in accordance with the Elliott Wave Theory for corrective phases. Recognizing the presence of this B-wave is significant because it implies that the broader downtrend may not have reached its complete decline and could potentially lead to additional downward pressure.
As we approach 2024 in our analysis, Van Lagen anticipates that the C-wave will emerge. In the context of Elliott Wave Theory, the C-wave represents the last phase of a larger bear market trend. If this expectation holds true, the materialization of the C-wave would indicate the end of Solana’s ongoing downtrend.
Van Lagen’s examination brings attention to the fact that there is bearish divergence appearing on the weekly RSI for the stock in question. This is a common phenomenon where the price achieves new highs, but the RSI does not follow suit and confirm those highs. Such occurrences can be indicative of an impending trend reversal or a weakening of the existing bullish momentum.
Van Lagen expressed via X: “I’m running low on SOL and bracing for another drop. In 2021, I completed a clear Elliott Wave uptrend. In 2022, I anticipate an A-wave downtrend, which consists of five subwaves. Following this, in 2023, there will be a B-wave correction, comprised of three subwaves. I foresee a C-wave downtrend in 2024. There’s bearish divergence on the weekly RSI.”
As a researcher, I’ve observed that the analyst doesn’t provide a definitive price target for SOL in my analysis. However, based on his chart interpretation, it appears van Lagen anticipates a potential price drop for Solana (SOL) to around $13. This represents a significant price decline of over 90% from the present price level.
A 50% Chance That This Will Happen
Van Lagen acknowledged the risks involved in his bearish bet on Solana, describing it as a “risky wager” and “bold move.” Yet, he justified his action by explaining that it was based on a solid theoretical foundation and acted as a counterbalance to his long investments in other assets. The analyst stressed the significance of examining charts devoid of emotions, highlighting the importance of maintaining an objective perspective when practicing technical analysis.
He explained that trading Short on SOL is a 50-50 decision, displaying boldness yet acting as a protective measure for his long positions. There’s valid justification behind this choice when considering the chart objectively, free from emotions. Despite the inherent risk, it is supported by a solid theoretical foundation.
Van Lagen’s assessment of Solana using Elliott Wave Theory implies a pessimistic view. However, it’s essential to keep in mind that the crypto market as a whole typically follows Bitcoin‘s trend. This connection leaves some investors puzzled. One individual expressed this confusion by stating, “It seems odd. You believe Bitcoin will rise in the forthcoming weeks, but Solana will fall? We are still in a market framework where major coins don’t decline significantly when Bitcoin is advancing.”
At press time, SOL traded at $165.
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2024-06-04 15:22