Short Correction Sets the Stage for a Bullish Breakout
The formation of a Flag pattern suggests a temporary correction in the price of Solana (SOL). However, the alignment of daily Exponential Moving Averages (EMAs) indicates that the market sentiment remains bullish. Despite a 2% loss in 24-hour trading volume, SOL continues to show strength.
In recent weeks, SOL experienced a drop in price due to overhead supply at the $127 level. This led to a decline in market cap by 25%. The bearish trend formed a falling channel pattern in the daily chart, resulting in a third drop within the channel.
However, active buyers are quickly absorbing supply at levels below $90, leading to lower price rejection candles. This increases the likelihood of a bullish reversal with a double-bottom pattern or within the flag pattern.
Additionally, the correction phase is testing the 38.20% Fibonacci level for the second time. The decrease in trading volume during this period suggests a lack of selling pressure, increasing the chances of buyers regaining control.
As a result, there is potential for SOL to bounce back and challenge the overhead resistance trendline.
Which Levels Can Solana Reclaim?
While Solana undergoes a short-term correction, the falling channel pattern indicates weakness in the current price trend. However, buying pressure at lower levels may soon lead to a bullish comeback for SOL.
If the price breaks above $100, the bullish trend may face resistance at $120 and $150. On the other hand, a correction below the 38.20% Fibonacci level could result in a decline to $72.
- Relative Strength: The daily RSI slope shows resistance against dropping below the 50% line, indicating a bullish fightback.
- Exponential Moving Average: The 50-day EMA provides dynamic support and coincides with the 38.20% Fibonacci level, solidifying the base.
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Hot Take: Solana’s Correction Phase Sets the Stage for a Bullish Reversal
Solana’s recent correction phase, characterized by a falling channel pattern and a drop in price due to overhead supply, indicates weakness in the market. However, active buyers absorbing supply at lower levels and the lack of selling pressure suggest a potential bullish reversal. With strong support levels from Fibonacci levels and Exponential Moving Averages (EMAs), Solana has a chance to regain momentum and challenge resistance levels. Traders should watch for a breakout above $100 and be cautious of a correction below the 38.20% Fibonacci level. Overall, Solana’s future looks promising as it navigates this correction phase.
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