Solana (SOL): Correcting Before Moving Higher Again

Dr. Arnout Ter Schure
Published: Oct 4, 2021, 17:25 GMT+00:00

I continue to view SOL in a major 4th wave, with the first move completed.

Solana (SOL): Correcting Before Moving Higher Again

Based on the Elliott Wave Principle (EWP) and Technical Analyses (TA), I was, three weeks ago, expecting Solana (SOL) to be in a more significant 4th wave correction. We knew, “given 4th waves are often complex price structures, comprised of at least three waves (a, b, c), expect a bottom soon at around the rising 20-day Simple Moving Average ($145ish) for red wave-a, then a “dead cat bounce” for red wave-b, and then last wave-c back down to the $140 zone.

SOL did bottom three days later at $134, rallied to $171 the next day, and declined again until the September 21 low at $116. Now the cryptocurrency is once again back at the low $170s. Was that all of the above-mentioned more significant 4th wave? IMHO not, as the September 21 low was likely only a subdividing (green waves a, b, c) intermediate (red) wave-a of (black) major wave-4. See Figure 1 below. Allow me to explain.

Figure 1. SOL daily chart with EWP count and technical indicators.

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4th Waves Are Often Complex

In my previous update, I showed “(black) major wave-2 lasted from May to mid-June and retraced almost precisely 62% of wave-1: textbook.” And “the February-March [2021] correction [was a 4th wave] of an intermediate degree, one degree lower than the current correction. It lasted a month and consisted of four dips and three rallies. But the overall pattern was more of sideways congestion, e.g., called a “Bull flag.” Besides, the correction retraced precisely 38.20% of wave-iii. Hence, since we are now dealing with a major-4 type correction, I expect a similar pattern to emerge over the next few weeks.

Thus, based on these lines of evidence, I continue to view SOL in a major 4th wave, with the first move (red, intermediate wave-a) completed. As explained, corrections always have at least three movements, and thus the 2nd move (red wave-b) is now underway. Ideally, it should target $200 +/- 10 before the third move (red wave-c) down kicks in.

But please remember, if the March-February intermediate wave-iv correction has taught us anything, then we know this current major wave-4 can have a few more tricks up its sleeve. Hence, it is nigh impossible to foresee each twist and turn, but the EWP can forecast the overall expected pattern well.

Thus, as long as SOL can stay above the September 23 high of $152, it can move higher into the ideal $200+/-10 target zone. Below $152 will increase the odds significantly for a revisit of the mid-September lows.

However, IF this is a flat correction, SOL will need to move higher to the ideal target zone. Otherwise, major wave-4 could morph into a (dreaded) triangle. Besides, please note SOL can even rally to as high as $240 and still be in a complex 4th wave. In that case, it will be called an irregular flat. But, a move >$254 will mean the correction has already ended. Thus we have our if/then parameters in place.

Bottom line: A few weeks ago, I showed that Solana (SOL) had “completed a more significant 3rd wave and is now in a 4th wave correction … [which] will likely be a long-drawn, sideways movement with numerous, hard to precisely foresee, rips and dips….” So far, thanks to the patterns EWP can predict, this was the correct POV as SOL has now corrected the most since the June low, which was a major wave-2.

The correction did present us with a few extra twists in September as well, but as I tell my premium crypto trading members, “focus is on the intermediate-term (weeks to months), as we navigate through this wave-4.” As such, I view the current rally as part of the aforementioned “dead cat bounce,” which needs to hold $152 to target $200+/-10 with an outside chance of $240. Below $152 will target the $110s once again.

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About the Author

Dr. Ter Schure founded Intelligent Investing, LLC where he provides detailed daily updates to individuals and private funds on the US markets, Metals & Miners, USD,and Crypto Currencies

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