Sonic (S) Forms Higher Low, Bullish Reversal Ahead After 23% Decline

Key Takeaways

• Sonic has dropped 23% in the last week but shows signs of reversing following a higher low formation at $0.48.
• IOMAP reveals strong support at $0.45, with 1,290 addresses holding 650 million Sonic tokens in profit.
• If buying pressure increases, Sonic could resist another drop and climb toward $0.57 in the short term.
• Interested in buying or selling SONIC S? Read our review of the best exchanges to buy and sell SONIC S.

Sonic (S), which has suffered a 23% price decrease over the last seven days, appears to be nearing the end of this correction. This development occurred after CCN observed a change in trend, as Sonic’s price flashed a green candlestick on the daily chart.

As of this writing, the S token’s value is $0.48, far below the $1 target it seemed ready to hit some weeks back.

While the altcoin might not rally quickly to that milestone, this analysis explains why an extended decline is unlikely.

Sonic Reverses Head and Shoulders Pattern

On the daily chart, Sonic’s price formed a head-and-shoulders pattern between Feb. 10 and March 10.

A head and shoulders pattern signals a potential trend reversal. It typically indicates a transition from an uptrend to a downtrend and features three peaks.

As seen below, the higher peak (head) is flanked by two smaller, similarly sized peaks (the “shoulders”). This pattern eventually led to the S token’s price of $0.43.

However, today, the token seems to have invalidated that bearish outlook as it has created a higher low. On Feb. 8, Sonic’s swing low was around $0.38.

By March 12, it was $0.43, but today, that value has increased to $0.48, suggesting that Sonic’s price might have escaped going through another decline.

Support at $0.45

Besides this, data from IntoTheBlock also seems to agree with the thesis. Using the In/Out of Money Around Price (IOMAP), the on-chain analytic platform shows major support for Sonic’s price near $0.45.

For context, the IOMAP employs the volume of tokens accumulated at a certain price range to spot support or resistance. When the volume in unrealized losses (red) is higher, it indicates resistance.

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On the other hand, a large cluster in the money (green) signifies support. As shown below, approximately 1,290 addresses hold over 650 million Sonic tokens in unrealized profits—outpacing the number of tokens in loss between $0.48 and $0.55.

Due to this, Sonic’s price is likely to breach these levels ahead and climb higher.

S Price Analysis: Slow Rebound Coming

Per the short-term outlook, the daily chart shows that the Money Flow Index (MFI) has refrained from dropping below the neutral line. This position indicates strength for Sonic’s price since selling pressure appears to be fading.

If the MFI reading continues to follow this path, the altcoin could be gearing up for its next leg. Regarding the potential targets, Sonic’s price might fail to drop below the 0.786 Fibonacci level.

If that is the case, the next target for the token could be $0.57. As stated above, this aligns with the signs shown by the IOMAP.

However, if selling pressure intensifies, the altcoin’s value might not experience such a rebound. In that scenario, the value could sink toward the $0.30 mark.