Crypto Trade Signal: SOL Setup For Bull Pennant Breakout
Deron Wagner | Oct 19, 2021 12:45AM ET
Leading crypto altcoin Solana is now setting up for an ideal buy entry after pulling back from the highs of an explosive rally. Here’s how to trade this hot crypto trade signal for maximum profits with a low-risk entry point.
In last week's post, we showed you how the Bitcoin Dominance Index (BTC.D) was reversing higher after finding a double bottom at its May lows. This rising market dominance of Bitcoin over the past few weeks has caused most altcoins to correct substantially off their recent highs (as BTC conversely nears its all-time high).
However, typical crypto market cycles indicate that funds will likely rotate back into the altcoin market when BTC eventually pulls back or enters significant consolidation. When that happens, there may be another wave of massive rallies in leading altcoins.
As such, now is a fantastic time to build your watchlist of potential cryptos to buy when the Bitcoin Dominance Index starts heading back down.
Continue reading for a quick walk-through of a top crypto trade setup in Solana (SOL), which may soon break out from a popular bullish chart pattern.
h2 Former leader ready to return to the spotlight/h2Solana, a fast-growing blockchain that aims to compete with Ethereum, was a monster winner this past summer. After breaking out to a new all-time high on Aug. 16, SOL exploded nearly 300% higher over the next four-weeks:
If you’re a follower, recall that we actually alerted you to that original SOL buy setup on the same day that massive breakout began. But don’t fret if you missed that monster move. The current pullback in Solana may provide you with a low-risk buy entry to ride the next wave up.
Check out the current crypto swing trade setup on the annotated daily chart of SOL below:
The pullback and subsequent price consolidation of SOL over the past month has formed a bull pennant pattern on the daily chart. Declining volume during this period tells us there has been no heavy selling during the correction. SOL also has been holding firmly at intermediate-term support of its 50-day moving average, a powerful technical indicator used by many institutions.
h2 Buy trigger for entry/h2
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We bought SOL in the Model Crypto Portfolio on Oct. 12, after the price formed a bullish reversal bar off the 50-day moving average (+7% gain currently). If you’re not a Morpheus Crypto member and missed that first entry, the next buy trigger was above the Oct. 16 swing high (around $168.50). A move above this level should spark a breakout above upper channel resistance of the bull pennant pattern.
If volume is strong, bullish momentum could propel Solana back to a test of its all-time high pretty quickly. Look for a significant volume surge to help confirm a potential breakout.
As always, be sure to set a protective stop to limit risk in case of a failed breakout. Our exact stop price is only available to subscribers, but you would want to exit quickly if the 50-day moving average and lower channel of the pennant fail to hold as support.
h2 Patience Pays/h2With Bitcoin currently less than 5% below its all-time high, we may not see a significant decline in the Bitcoin Dominance Index any time soon. As such, major upward price movement in most altcoins now (including Solana) may take a bit of time. However, look for altcoins to quickly return in favor whenever Bitcoin eventually pulls back or enters a meaningful period of price consolidation. When that happens, SOL could once again take center stage and resume its dominant uptrend to blue sky territory again.
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