Key Takeaways
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.
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.
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.
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.
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.