Solana’s price risks falling to $52 as it enters a consolidation trap below the key SMA

Solana’s price rebounded to above $85 on Friday morning, reversing some of its losses following Wednesday’s rally. However, it remains below the key SMA level which puts it at risk of moving to its next leg under the upcoming session.

According to data from crypto.news, the price of Solana (SOL) rose by 4.5% to an intraday high of $85.2 before settling around $83 at the time of writing. The rebound that followed a market-wide recovery as Bitcoin advanced above $73,000 helped the altcoin retrace some of its losses since falling from Wednesday’s highs.

Despite the recent rebound of the token, it remains at risk of further declines in the coming weeks, as it has failed to recover the important SMA level, a failure that has led to historically strong declines.

The daily chart shows that Solana’s price has been trading within the range of $76 to $92 since February of this year. The token recently moved to the lower end of this range two weeks ago.

In doing so, Solana’s price dropped below the 50-day SMA, which has historically been followed by a significant bearish pressure since October 2023.

Notably, Solana’s price movement has been repeating a three-step cycle every time it prepares to move to its next lower leg in the past six months.

The mentioned pattern starts when the price of Solana retraces the 50-day SMA, followed by a quick drop back below the index while losing the support of the previous high. After this, the token enters a consolidation trap, a time when the token moves sideways within a tight range before its final split towards its next leg down first.

As taken from the daily chart above, the price of Solana previously formed this pattern in November last year and again in early January of this year, each time it dropped below the 50-day SMA and then entered a weekly consolidation phase. After this, it faced a strong sell-off, eventually settling down and making a new low.

In the latest scenario, Solana’s price rose above key resistance in mid-March when it rose to $97. The token has since been in a downtrend, making lower lows and lower highs in the process. Moving forward in the last few days, the token is stuck in its consolidation phase in the second step of the current cycle as it moves between $79 and $81, and rests below the 50-day SMA around the $86 mark.

If we think that the pattern holds, the continuous sideways movement should not be interpreted as a sign of stability but as a token coil before starting its next leg down.

As such, if Solana fails to recover the SMA level of $86 50 in the coming sessions, it may be at risk of a rapid decline to $52, a level calculated by subtracting the percentage decline observed during previous cycles from the current consolidation peak.