Sonic (S) Price at Crossroads — Key Support to Dictate the Trend

Key Takeaways

• Sonic’s (S) price broke out from a descending wedge.
• The Sonic price follows a parabolic support trend line.
• Can S break out above its key resistance at $0.85 – $1?

Sonic has trended downward since Dec. 16, 2024, continuing the bearish momentum into 2025. However, bulls regained control in February, fueling a 200% increase after a breakout from a descending wedge.

Despite the rapid appreciation, S failed to close above the main resistance area of $0.89, created by the 0.5 Fibonacci retracement resistance level. With the trend now at a crossroads, let’s see if the Sonic price can close above it and continue its ascent, or if it will create a lower high and fall to new lows.

S Price Breakout

The daily time frame chart shows that S broke out from a descending wedge pattern on Feb. 11. The price followed the breakout with a parabolic increase that culminated with a high of $1 on Feb. 21.

However, S failed to close above the 0.5 Fibonacci retracement resistance at $0.89. Rather, it created a bearish daily candlestick with a long upper wick (black icon), a sign of selling pressure.

The S price has fallen slightly since, trading below the Fibonacci resistance level. If the increase is corrective, this critical resistance often acts as the top of upward movements.

*Note: The Fantom chart is used instead of the Sonic one because of the availability of more price history.

Despite the failure to break out, technical indicators are still bullish. The  Relative Strength Index (RSI) is at 70 while the Moving Average Convergence/Divergence (MACD) is positive. Both are increasing and neither has generated any bearish divergences yet.

However, even though technical indicators are still bullish, the fact that S did not close above the 0.5 Fibonacci level makes it possible that the increase is corrective, rather than it being the beginning of a new upward movement.

Critical Support Leel

The six-hour frame chart shows that the wege contained a five-wave downward movement (red), suggesting it was a diagonal. This does not bode well for the future movement, since it means that the ongoing S upward movement is corrective.

However, the Sonic increase has followed a parabolic ascending support trend line, which does not often occur in corrective movements. So, the wave count and price action do not completely align.

Nevertheless, the S price currently trades at the parabolic trend line, so it has to bounce if the trend is bullish. This would catalyze the beginning of wave C which takes the price to new highs.

Alternatively, a breakdown from the parabola would mean the increase was an A-B-C corrective structure instead (green). If that happens, the S price would likely begin a new five-wave decline, taking it to new lows.

While this does not fit with the short-term movement, since parabolas are not often corrective, it fits better with the long-term count, which shows another upward A-B-C correction followed by the five-wave decline.

Building on that, it makes more sense if the ongoing increase is corrective because the long-term Sonic trend is still bearish. As a result, the reaction to the parabolic trend line will be key to determining the future trend.

Sonic at a Crossroads

The Sonic price strengthened its bullish sentiment with a breakout from a descending wedge pattern that led to an over 200% increase. However, the recent downturn has damped the optimism.

The S price barely holds on to a parabolic ascending support trend line, a threshold for whether the trend is bullish or bearish. A breakdown from the parabola would likely lead to new lows, while a daily close above $1 to new highs.