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Solana Price Up 40% in May but SOL Road to $200 Remains Challenging

Last Updated May 20, 2024 9:49 AM
Valdrin Tahiri
Last Updated May 20, 2024 9:49 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Solana has been one of the biggest gainers in the past seven days.
  • Despite its notable increase in May, the SOL price is approaching resistance.
  • If the SOL correction is not over yet, what shape will the next movement take?

SOL has been one of the best performing cryptocurrencies in May. It has been the biggest blockchain gainer, significantly outpacing Ethereum. In May alone, the price has increased by over 40%.

Solana’s upward movement has taken the price to a confluence of resistance levels. This leads to the possibility of a rejection and a local top. If this happens, will it lead to new lows, or is more consolidation in store before an eventual breakout?

Why Did Solana Increase in May?

The SOL price has fallen since its yearly high of $210 on March 18. The decline led to a low of $116 on April 13. SOL created a higher low on May 10 and has increased since. So far, the price has gained over 40% in May alone.

The Solana price increase was preceded by a bullish divergence in both the RSI and MACD. These divergences often lead to such trend reversals. Since then, the RSI has moved above 50 and the MACD has crossed into positive territory, both signs of a bullish trend.

Solana Price Triangle Movement
SOL/USDT Daily Chart | Credit: TradingView

While the SOL  price reached a high of $179 on May 20, it is approaching a confluence of resistance levels. The resistances are created by the 0.618 to 0.786 Fibonacci retracement resistance area and a resistance trend line for a potential triangle. This is the final Solana price resistance area before $200.

The long-term wave count implies SOL will not break out on the first try. This is because the correction has been extremely short relative to the previous increase.

The most likely count suggests SOL is in wave four of a five-wave upward movement. Wave three took place over 287 days. If the correction were to have ended on April 13, it would have lasted for only 21 days.

Solana Long-Term Price Movement
SOL/USDT Weekly Chart | Credit: TradingView

So, even though the decrease was substantial and validated the $140 area as support, the length of the correction is not optimal based on Elliott Wave theory guidelines. A look at a lower time frame can provide some possibilities as to what shape this correction will take.

SOL Price Prediction: Tracing the Future Movement

Wave four very often takes the shape of a symmetrical triangle. Since SOL is in wave four, it is likely the correction will transpire inside a triangle. In this possibility, SOL is completing sub-wave B (black) of this five-wave increase.

Once this is done, a decrease toward the support trend line will occur, completing sub-wave C. Then, there will be more consolidation before the Solana price breaks out and moves above $200.

The creation of the triangle will satisfy Elliott Wave guidelines and likely lead to a longer correction of at least 100 days, more than a third of the 280-day upward movement.

Triangle Wave Count
SOL/USDT Six-Hour Chart | Credit: TradingView

The second possibility is that the decrease is an A-B-C flat corrective structure. Since A was a three-wave structure (highlighted), wave B will go near the wave A highs. In this possibility, the triangle will not be created. Rather, the SOL price will create a version of a double top pattern, and then the C wave will conclude near the April lows at $116.

While this correction would be deeper, it will take less time relative to the triangle possibility.

SOL Flat Wave Count
SOL/USDT Six-Hour Chart | Credit: TradingView

So, the two outlines for the correction differ in the length and depth of the correction and the height of the B wave. The reaction to the triangle’s resistance trend line will determine the more probable path.

Solana Price May Reach Local Top Before $200

Solana’s wave count predicts the price will reach a local top soon. The exact outline of the ensuing movement is still unclear, with one potential count predicting more consolidation while the other a sharper downturn. In any case, both counts suggest a local top is imminent. The main reason for the correction not being over yet is its length relative to the previous decline.

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