Solana’s SOL price is at risk of losing almost half of its value in the coming weeks due to a classic technical setup that suggests a potential 40% crash. Currently, SOL is trading at around $76.35, which is a 50% increase compared to its recent low of $51. However, the rally lacks the necessary momentum to sustain the upward trend. The relative strength index (RSI) has dropped from 90 to around 73 on the three-day chart, indicating lower highs compared to the price’s higher highs. This bearish divergence is also evident in the declining three-day trading volumes, which suggests that the bullish trend may be losing strength and a trend reversal could be on the horizon.
In the past few days, SOL’s price has stabilized near $73, which coincides with its 0.236 Fibonacci retracement line that acted as a support in the first quarter of 2022. If a correction follows the bearish divergence signals, the target price for SOL is a 40% drop towards its 50-3D exponential moving average (EMA) at around $42 by January 2024.
However, independent analyst Cold Blooded Shiller sees this bearish divergence as a buying opportunity rather than a sign of a macro crypto top. He believes that there is a stronger chance of getting cheaper prices to buy at, and the bearish sentiment may run its course around the 50-3D EMA, followed by a rebound in the first quarter of 2024. The weekly timeframe chart for Solana also supports this outlook, as previous market corrections have exhausted near an ascending trendline support. Therefore, a move towards the trendline at around $40 could reignite bullish sentiment. Additionally, traders are likely to buy SOL near the 0.786 Fib line around $55, which has now become a resistance-turned-support level.
To confirm a bearish trend reversal, SOL’s price must crash below these two support levels. If it fails to do so, the price may rise towards $100 in early 2024. It’s important to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any decisions.