Key Takeaways
On July 20, Solana (SOL) signaled a potential bullish trend by breaking through descending resistance. Still, the move lost momentum, leading to a correction toward $120 by Aug. 5.
Although SOL staged a rally, rebounding from $132 on Oct. 3, its inability to hold key levels leaves its trend uncertain.
The price is now retesting the crucial $160 horizontal resistance, which remains a pivotal point.
Whether SOL surpasses this resistance or faces another rejection will determine if the bullish momentum can continue or if further downside is imminent.
On July 20, SOL broke above its descending resistance, hinting at a potential bullish trend if it could sustain this breakout.
However, failing to maintain support signaled that the corrective pattern, which began in mid-March, was still in effect.
This led to SOL’s decline toward its horizontal support of around $120 by Aug. 5.
A descending flat triangle formed as selling pressure intensified, but buyers continued to provide critical support. This level was retested on Sept.6, triggering a bounce that fueled SOL’s recent rally.
A higher low on Sept. 16 indicated the start of an uptrend, though SOL failed to break above the significant horizontal resistance at $160 on Sept. 27.
The price dropped 17% to $133 on Oct. 3, questioning the bullishness behind the move as it fell through its invalidation point at around $140 in support.
Despite being hard rejected at $160, SOL regained momentum and is now back at this significant horizontal zone.
Will it surpass it this time, or will another rejection occur, sending it back to the downside?
Our earlier analysis outlined two possible scenarios, contingent on whether the WXYXZ correction was completed at the Sept. 6 low.
If SOL initiated a new uptrend on Sept. 6, it could drive a sustained breakout above the horizontal resistance at $160. Surpassing this level would confirm a five-wave impulse, validating the continuation of an uptrend.
Alternatively, the rise may have been corrective, with the $160 resistance holding firm. Additionally, the recent rejection and subsequent drop below the $140 invalidation level reinforce this bearish scenario.
According to Elliott Wave Theory, wave four cannot overlap wave one’s territory — which happened as SOL fell to $132 on October 3.
Given this structure, the rally ending on Sept. 27 is labeled an ABC corrective wave. Therefore, the subsequent decline likely marks the start of a new downtrend.
The recent recovery from Oct. 3 is corrective, but today’s high should be lower than on Sept. 27.
In the short term, one more high would be expected for a proper interaction with the $160 resistance, after which we will see which scenario is a primary one. But at the time of writing (Oct. 15), a bearish outlook is more likely.