Solana (SOL) Price Deviates Above Resistance — Returns to Key Support at $160

Key Takeaways

• Solana (SOL) created a bearish candlestick last week.
• It confirmed a deviation above a resistance trend line.
• Can SOL regain its footing and move above this resistance?

The SOL price increased over 10% in October, at one point breaking out from a long-term descending resistance trend line. This signified that the nearly six-month correction had ended.

However, SOL failed to sustain the increase and is back under the descending resistance trend line. SOL now trades inside a critical horizontal support level which could determine the short-term trend’s direction.

Let’s analyze the price action and see if a bounce or breakdown is more likely.

Solana’s Failed Breakout

The weekly time frame SOL chart shows that the price has decreased inside a symmetrical triangle since the yearly high of $210 in March.

Last week, the price of SOL seemingly moved above the triangle’s resistance trend line but failed to sustain the increase. Rather, it created a bearish engulfing candlestick (black circle), confirming a deviation above the triangle’s resistance trend line.

A downward movement usually follows these deviations, and in the case of SOL, it could trigger a drop to the triangle’s support trend line at $140.

Despite the failure to sustain the breakout, technical indicators are still bullish. The Relative Strength Index (RSI) is above 50 and the Moving Average Convergence/Divergence (MACD) is positive and increasing.

So, the weekly chart suggests that an eventual breakout is likely despite the recent setback.

Short-Term Movement

While the weekly chart still leans bullish, the daily one is less clear. After the deviation, the SOL price returned to the $160 horizontal support area. The area previously acted as resistance, so the current decline resembles a retest.

However, indicators are showing bearish signs. The MACD made a bearish cross and the RSI risks breaking down below 50. If this happens, the SOL price would likely fall to the ascending support trend line at $150.

This would be a more bearish development since it would mean that the breakout above $160 was just a deviation. Additionally, it would make the entire increase look corrective.

So, based on the daily chart, the SOL price may have bounced at the $160 horizontal support area, but a decline to the ascending support trend line at $150 is not ruled out.

SOL Price Prediction

The wave count suggests that SOL is in wave four of a five-wave increase, which took the shape of a triangle. While a breakout from the triangle is likely, it is unclear if wave four has ended or another low is in store.

If wave four was an A-B-C structure, it would mean the correction ended in August and SOL started the final wave of its increase. However, if it is an A-B-C-D-E structure instead, SOL could complete another decline before eventually breaking out.

Both remain possible because of the mixed signs from the daily time frame.

In any case, the long-term trend is likely still bullish. The target range for the top of the high is between $273 and $306, created by the 1.61 external Fibonocaci retracement of wave four and by giving wave five the same length as waves one and three combined.

Solana Can Reach $300

The short-term SOL trend is undetermined after last week’s failed breakdown. A strong bounce at $160 will mean the low is in but a close below the area can cause a deeper retracement.

In any case, the long-term trend remains bullish. A breakout from the triangle can trigger an increase toward $273 – $306.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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