Solana (SOL) Rejected at $180, but Key Indicators Favor a Recovery

Key Takeaways

• Solana has broken out of a descending channel formed on the daily chart after an initial decline from $180
• The daily chart shows a bullish divergence and a golden cross that validates the potential recovery.
• The Parabolic SAR has flashed a buy signal, revealing that SOL’s price could jump above $200 soon.
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After falling to $135 toward the end of February, Solana’s (SOL) price had a bullish engulfing candle that sent the price to $180 on March 3.

However, as soon as SOL hit the mark, it faced rejection, leading to a drop to $142. But in the last 24 hours, Solana’s price has shown readiness to rally back to Monday’s height.

Although some obstacles might hinder the move, this analysis indicates that the token could be heading toward recovery.

SOL Bulls Challenge Descending Channel

On the daily chart, Solana’s price has been trading within a descending channel since January. But as of this writing, the cryptocurrency is on the cusp of rising above the channel’s upper trendline, indicating that bulls are attempting to break above the bearish pattern.

Furthermore, the Money Flow Index (MFI) has risen from the previously oversold level. The MFI shows the level of buying and selling around a cryptocurrency.

It also shows whether an asset is oversold or overbought. Readings above 80 indicate that the asset is overbought, while those below 20 indicate that it is oversold.

The MFI was around 12.30 yesterday, indicating that SOL was oversold. Today, the rating has climbed to 40.62 and broken above the downtrend.

Should buying pressure continue to rise, SOL bulls might successfully defend the support at $134.79. If that happens, the next level for the token to reach could be a retest of the $180 mark.

Golden Cross Appears

In line with this thesis, the Moving Average Convergence Divergence (MACD) also supports the notion that Solana’s price might continue to jump. The MACD is an indicator used to measure trend momentum and timing entries and exits.

As of this writing, the MACD reading has turned positive, indicating bullish momentum around SOL. The Exponential Moving Average (EMA) positioned on the indicator has also formed a golden cross.

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The golden cross appears when the shorter EMA rises above the longer EMA. Historically, this is a bullish sign that leads to higher prices.

Thus, if the EMA reading remains positive and the golden cross remains the same, then Solana’s price might retest the $180 resistance, as stated earlier.

SOL Price Recovery Strengthens

In addition, the Parabolic Stop-and-Reverse (SAR) indicator supports Solana’s price recovery. Like the MACD, the SAR measures trend direction and spots possible entry and exit points.

When the indicator’s dots are below the price, they indicate a bullish trend. But when they are above it, they indicate a bearish trend.

As of this writing, the dots of the Parabolic SAR are below SOL’s current value, indicating a buy signal that could lead to higher prices. If this remains the same, Solana’s price could jump to 0.618 Fibonacci level positioned at $180.

If buying pressure increases at this point, the value could be $224.29. On the flip side, if SOL fails to rise above the resistance at $150, this prediction might not come to pass. Instead, SOL could plummet toward $110.