SOLUSD Weekly Outlook: Bullish Cypher PatternOverview
On the weekly timeframe, BINANCE:SOLUSD has shifted gears since our last analysis. Previously, we flagged a bearish divergence—higher highs in price paired with lower highs on the DMI Delta—hinting at weakening momentum. Price has since declined, and now it’s tapping into a key demand zone, completing what appears to be a Bullish Cypher harmonic pattern.
Why This Matters
Bearish Divergence Played Out : The prior divergence signaled fading bullish pressure, and the subsequent drop brought SOLUSD from its highs into this demand zone—a textbook pullback scenario.
Bullish Cypher Completion : The pattern’s structure is taking shape: X-A (initial up move), A-B (~38.2%-61.8% retracement of X-A), B-C (~113%-141.4% extension of A-B), and now C-D targeting a 78.6% retracement of X-C. The D point aligns with this demand zone, marking a Potential Reversal Zone (PRZ).
Demand Zone Test : This level has historical buying interest. If it holds, it could validate the Cypher and spark a reversal.
Key Considerations
Watch the PRZ : The 78.6% X-C retracement (~D point) is critical. To confirm a bounce, look for reversal signals like a bullish candle, volume surge, or RSI/DMI Delta divergence.
Lingering Divergence Risk : While the drop aligned with the prior bearish signal, momentum remains a question. Cross-check with volume or DMI trends before committing.
Risk Management : For longs, set stops below the demand zone. If shorting a breakdown, target the next support level from prior lows.
Upside Potential : A confirmed Cypher could push the price toward the 38.2% or 61.8% retracement of the C-D leg—map these targets on your chart.
Conclusion
The recent decline in BINANCE:SOLUSD following our bearish divergence call has set the stage for a Bullish Cypher at this demand zone. If buyers defend this level with conviction, the pattern could drive a meaningful reversal, invalidating the prior bearish pressure. However, a failure to hold here might extend the correction. Traders should monitor price action and volume at the PRZ for the next actionable signal.
