Key Takeaways
Solana (SOL) reached its all-time high of $294 on Jan. 19, followed by a corrective phase, forming a descending triangle structure.
The 8% gain from Jan 27 indicates a possible reversal, but a breakout from the descending triangle will provide the best confirmation. The market is at a pivotal point, with the current price action at around $240.
The 4-hour chart displays a five-wave Elliott Wave impulsive rally, with Wave 5 peaking at $294 on Jan. 19 before entering a corrective ABC structure.
The downward move established a descending triangle pattern, with Wave C nearing completion.
The current price is around $239 after an 8% recovery from its recent low of $221, showing a breakout attempt.
The 0.382 retracement at $246 has acted as an initial barrier, with further resistance at $264 (0.236 level).
Meanwhile, critical support is established at $231 (0.5 Fibonacci retracement), followed by $216 (0.618 level), aligning with previous price reactions.
The Relative Strength Index (RSI) on the 4-hour chart shows a bullish divergence, reinforcing a potential shift in momentum.
The oversold RSI reading during the final leg of Wave C suggests buyer interest near key support zones.
The one-hour chart provides a detailed view of the potential reversal structure. Elliott Wave analysis suggests that SOL has been on a five-wave decline since its previous interaction with the triangle’s resistance on Jan 24.
Its Jan. 27 support interaction with the triangle’s support could have marked the conclusion of the five-wave impulse, or we still have one lower low.
A breakout above the 0.382 Fibonacci retracement at $246 would confirm a bullish continuation, targeting $264 (0.236 Fibonacci) as the next major resistance.
Short-term retracements may occur, with potential pullbacks to $231 (0.5 level) acting as a retest of previous resistance-turned-support.
If SOL sustains momentum above $246, a measured move projection suggests a rally toward $264, possibly extending toward previous highs near $294.
However, failure to break the triangle convincingly may lead to a retest of $216 (0.618 level), invalidating the bullish thesis.
The RSI on the lower timeframe supports a bullish case, as an upward crossover from oversold conditions signals increasing buying pressure.
A breakout with strong volume would confirm further upside potential.