Solana (SOL) Price Falls by 25% After Deviation – Will It Bounce Back?
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The Solana (SOL) price has decreased since its yearly high of $32.13 on July 14. The decrease validated the $27 horizontal area as resistance.
The weekly and daily time frame readings offer differing outlooks, making the trend’s direction remain uncertain.
Solana Price Clears Long-Term Resistance
The weekly time frame analysis of SOL’s price reveals a decisive breakout from a long-term resistance line in the beginning of July. Before the breakout, the line had been active since November 2021, lasting for over 600 days.
Such breakouts are often indicative of the end of the previous trend and suggest the beginning of a new bullish trend. As a result, it appears likely that SOL’s price has initiated a bullish trend reversal. If this is indeed the case, we can expect SOL to gradually rise towards its previous highs.
It is important to note that SOL’s price couldn’t surpass the $27 horizontal area, resulting in the formation of a long upper wick (red icon), which indicates selling pressure and validated the $27 area as strong resistance.
The SOL price has decreased slightly since the rejection and now clearly trades below the $27 area.
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SOL/USDT Weekly Chart. Source: TradingView
To support the legitimacy of the breakout, we can look at the weekly Relative Strength Index (RSI), a tool commonly used by traders to assess market momentum and identify potential overbought or oversold conditions, influencing their trading decisions.
Notably, the RSI has shown a higher low and is currently positioned above 50. The fact that last week’s close was above 50 (green icon) marks the first time this has occurred since the end of 2021.
However, to confirm the possibility of a bullish trend reversal, it will be crucial for SOL to convincingly break out from the $27 horizontal area.
SOL Price Prediction: Deviation Could Signal Bearish Move
While the technical analysis in the weekly time frame leans bullish, but the daily time frame shows bearish signs. The main reason for this is the deviation above the $27 resistance area (red circle) and subsequent decrease below it. These deviations are considered bearish signs and usually lead to sharp movements in the downward direction.
After the deviation, SOL fell to a low of $22.73 but is now trading close to $24.
The daily RSI is at a crucial level since it is trading just above the 50 line. Movements above or below this line can help determine the future trend’s direction.
A decisive RSI bounce and price increase above $27 will mean that the trend is bullish. In that case, the SOL price could move to the next resistance at $46, an increase of 93% measuring from the current price.
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SOL/USDT Daily Chart. Source: TradingView
However, if the SOL price continues its descent, a drop to the long-term ascending support line at $16.50 will be likely. This would amount to a drop of 31%.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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