POTENTIAL Dead Cat Bounce Baking...

SOL has recovered nicely after it's 67% loss, and is one of the strongest large cap coins this run up.

It's currently right below the 0:0.618 of the previous wave down and forming a broadening wedge on a smaller time frame.

So, the question arises...is this a true recovery or is it a dead cat?

It can be challenging to discern the difference, but there could be clues that strengthen the TA.

1) The broadening wedge (Which could morph into a diamond top) below the 0.618 is suspicious. On the 1day chart it is getting rejected by the 200 SMA and RSI bearish divergence is starting to show.

2) Volume has been decreasing since the beginning of the recovery.

3) There is a potential doji candle in the making on the 1W time frame, with 2days and 8 hours until closed.

4) USDT.D came short of a LTF 1:1 3 wave correction, so there is a chance that it could come back and try to reach that target. It is printing a potential doji on the 0:0.618 retracement with increased buying volume.

To void the dead cat, we would have to see a higher or equal low of retracement to the downside if this is a wave top. Or at least a 0.85 retracement to the upside if price continues up.

So, this could be wave X of a WXY correctional pattern. On a larger time frame it appears the ABC pattern is complete, but could form a deeper C wave bottom.

If the dead cat does bounce, how far could price continue downwards? There is a strong ratio band of support, the 1:2.272 on higher TF (around 67.00).

This TA is not meant to scare, nor is it recommended to take action in re-organizing your assets. It is intended for educational purposes only.

Calling a dead cat is a gutsy move, so often, most of those calls don't always play out. But analyzing real time price action and historical data is all we can do to help determine those potential moves.

I will try my best to keep this publish updated, and provide potential clues. So, when you do see other traders provide constant updates, please hit the BOOST button, as this requires a lot of dedication and time, and it shows that they care.

Key Take Away: Look for higher local highs to the 0.85 to void the dead cat, or a higher/equal low.

Thanks, and Good Luck!

- Not Financial Advice -

Note

Bearish engulfing candle on the 2 HR chart. Could be wave top 2 of a 3 wave correction. Possibly a 1:1 ...

Note

SOL recovered nice after its -6.86% drop. It tagged the 1.272 again and now catching resistance in the GW. If price can tag the .85 @ 174.88, this could be a clue that the 1.272 is the minor wave bottom and could void the possible 1:1 deeper retracement.

Note

And another bearish engulfing candle on the 1HR chart. Selling pressure and volatility is increasing. So it's possible that the LTF recovery is a minor wave top in the GW.

Also, there does seem to be a diamond top forming...

So, it's possible that this could be a HTF pivot here if the diamond formation remains stable.

On the 1W chart, the doji candle did indeed print, marking a potential danger zone for longs.

Beware of potential retracement to the downside.

Note

SOL refuses to give

This is slowly morphing into a descending channel, which adds further bullish impetus to the structure. It's possible that a breakout will occur and retest the flag top. If price can tag the 0.85 (yellow boxed fib level), this could strengthen the chances of the retest.

I was originally anticipating a 1:1 3 wave correction from the top, but its possible that the correction was done with the 1:0.618.

Note

Bullish Impetus incoming. Price has reached the 0.85, suggesting that a test to break above the flag is underway.

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Exciting times throughout the market right now. A test of the flag top resistance is in effect now. We will see if it has enough gas to push through. The good thing about the structure here is that it has exceeded the 0.85 to the upside on a higher time frame, which suggests more higher highs. It's possible that a descending channel will form here, and perhaps find support in the yellow boxed structure. And there is also a chance it does something totally different, so this is just a "shot from the hip" as far as further patterns are concerned. A test of the upper 0.618 could very likely be underway.

Note

SOL is starting to look dangerous here. The slightly higher high that printed suggests that this could be a mini distribution phase here.

There could be another attempt to retest the wedge top, but it looks like it may get ready to drop.

I've also noticed on a higher time frame, there is another broadening wedge top formation. And there is a textbook saying: "Broadening Wedge - Dead Cat Bounce - Pump".

So another reminder to trade with caution in this area. Good Luck...

Note

A strong bounce, with a bullish wick at the 1:1. Could be a low time frame 3 wave correction here. Possible a retest attempt to break local high...

TheGemHunter

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TheGemHunter