After reaching $126 on December 25, Solana‘s price has declined in 2024. On January 8, it came down to $85, marking a decrease of 31%, but since yesterday, January 8, it has gained 20% and managed to go up slightly above $100 again.
This has made some analysts bullish, pointing out that the price action formed a bull flag, which, if broken, could lead the price of SOL to $168 in the next upturn.
But has this uptrend started, or did we see a corrective increase?
According to prominent analysts on X (formerly Twitter), Ali, and Rekt Capital, Solana formed a bull flag , and if it manages to break the $110 resistance, it is eyeing new highs. Looking at the 4-hour chart, we can see that the descending channel was indeed formed with today’s (January 9) high coming to its resistance level.
It is starting to show signs of struggle, and the 4-hour candle is turning red, but there is still a chance that the bullish momentum will continue. However, it could also end in rejection, causing an even stronger decline, which Rekt Capital refers to as the “make it or break it” scenario in his X post.
Today’s high is still a lower one compared to January 2, which is why we still have to count this structure as a bearish one. But considering its context – coming after a larger rise it could be interpreted as a temporary correction before further run-up.
Zooming onto the daily chart, we can see that the uptrend peaking at $126 started on June 17, last year, according to our count. This was most likely wave 3 out of the five-wave impulse, and judging by the wave structure, it likely ended on the December 25 high.
That would make the descending move a corrective wave 4, after which another rise for wave 5 would be expected. However, that might come later. Considering the previous increase, the now-formed descending channel on the 4-hour chart could be its first lower-degree sub-wave.
This means that although an increase in the short-term can be seen, it is a corrective one, resulting in another lower low before the next rise. The most significant horizontal level is around $80, corresponding with the 0.382 Fibonacci level as the optimal retracement point for wave 4.
Previously, we saw a breakout above it, so a retracement that would retest it for support before a sustainable uptrend continuation would be a logical price progression. If the price goes above $110, it could mean that the 4-hour descending channel was the completed wave 4 correction; in this case, an immediate uptrend continuation would start, but that is not as likely.
In conclusion, the analysts are correct. If the price of SOL continues moving to the upside and breaks above the current descending resistance, it could signal the next uptrend, advancing to $168, where the next significant resistance zone is. It would likely end its larger uptrend from January 1, 2023.
However, according to our analysis, this isn’t as likely as further tumbling to $80 at first before Solana can embark on this journey.
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