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Solana (SOL) Dips Below $180 but Shows Strong Recovery Potential

Published
Nikola Lazic
Published
By Nikola Lazic
Edited by Ryan James

Key Takeaways

  • Bullish divergence on RSI
  • Descending channel nearing a breakout
  • Key Fibonacci levels in play

Solana (SOL) recently showed significant price activity, completing a five-wave structure before going into a complex (w-x-y-x-z) corrective phase.

The analysis focuses on the current corrective structure and potential bullish reversal patterns as SOL navigates key Fibonacci levels and descending channel boundaries.

SOL Price Analysis

On the 4-hour chart, SOL’s price action reveals a completed five-wave structure that led to a Wave (v) peak at $294.5 on Jan. 19. The peak was followed by a transition into a complex (w-x-y-x-z) corrective phase marked by a descending channel. 

The correction concluded with wave Z at around $195.81 (0.786 Fibonacci retracement), indicating a potential reversal. It spiked to $176 at its lowest point, but the 4h candle closed with a 13% wick, indicating a strong buyer presence. 

SOL price analysis
SOLUSD price got oversold | Credit: Nikola Lazic/TradingView 

The Relative Strength Index (RSI) on the 4-hour chart shows bullish divergence, suggesting weakening bearish momentum despite recent price lows.

This divergence aligns with the price’s approach to the 0.786 Fibonacci retracement at $195.81, a level historically significant for reversals. 

Furthermore, the price is testing the lower boundary of the descending channel, which, if broken to the upside, could signal the start of a new impulsive wave.

 The overlapping corrective structure and diminishing downside momentum hint at a potential bullish breakout, especially if SOL maintains above the critical support zone around $173.42.

SOL Price Prediction

The 1-hour chart outlines a potential bullish scenario supported by emerging wave structures.

SOL appears to be forming the early stages of an impulsive five-wave sequence, with wave (i) and (ii) seemingly completed and wave (iii) in progress.

SOL price prediction
SOLUSD price got oversold | Credit: Nikola Lazic/TradingView 

The price action suggests a possible breakout from the minor descending resistance, with projected targets aligning with key Fibonacci extensions.

Wave (iii) could aim for the 0.618 Fibonacci retracement at $216.90, reflecting a strong upward thrust typical of third waves.

 A corrective wave (iv) may follow, testing support near previous wave (i) highs, before wave (v) pushes towards higher resistance around $231.72 (0.5 Fibonacci level). 

This bullish outlook remains valid if SOL holds above $195.81, with the invalidation zone below $173.42, where bearish momentum could resume.

Key Levels to Watch

  • Immediate Resistance: $216.90 (0.618 Fibonacci retracement)
  • Key Support: $195.81 (0.786 Fibonacci retracement)
  • Critical Support: $173.42 (historical support zone)
  • Short-Term Target for Wave (v): Above $231.72 if bullish momentum sustains
  • Invalidation Zone: Below $173.42, signaling a potential bearish continuation
Disclaimer: The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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Nikola Lazic

Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis. Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information. Expertise: Cryptocurrencies, Technical analysis, Elliott Wave Theory, On-chain metrics, Research reports.
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