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Solana (SOL) Faces Continued Downside Pressure Despite Bullish Breakout

Picture Source: BeInCrypto

The price of Solana (SOL) experienced a setback after initially breaking out from a bullish pattern, resulting in a sharp decline starting on June 5. This article analyzes the price action and wave count to provide insights into the future direction of SOL. Despite the current downward trend, there are potential scenarios that could indicate a bullish reversal.

Solana Falls Below Long-Term Support:

Examining the daily time frame technical analysis for SOL reveals a downward trajectory since April 17. On June 4, Solana formed a lower high, accelerating its rate of decrease. Eventually, this decline led to a low of $12.80 on June 10, a significant drop that also caused a breakdown from the long-standing $17 horizontal support area. While SOL may retest this area, it is likely to act as a resistance level.

Weekly RSI Provides Mixed Signals:

The weekly Relative Strength Index (RSI), a momentum indicator used to assess overbought or oversold conditions, offers mixed signals for SOL. Readings above 50, along with an upward trend, indicate an advantage for the bulls, while readings below 50 suggest the opposite. Currently, although the RSI is increasing, it remains below 50. However, it has moved out of oversold territory, which is often associated with the beginning of bullish trend reversals.

SOL Price Prediction: Wave Count Signals Further Downside:

Analyzing the daily time frame wave count, based on the Elliott Wave theory, suggests that SOL is approaching the top of wave four within a five-wave downward movement. This interpretation gains support from the fact that the price is trading at a confluence of resistance levels, both horizontal and diagonal. If the wave count proves correct, the SOL price could decline towards $10.42, which is identified as the target using the 1.61 external Fibonacci retracement of wave four.

Bullish Reversal Scenario:

However, it is important to note that if the SOL price surpasses the low of wave one at $18.72, it would indicate a bullish trend instead. In such a scenario, SOL could potentially target the next resistance level at $23.

Conclusion:

The recent price action and wave count analysis indicate that Solana (SOL) is currently facing downward pressure, with further downside expected until a potential bottom is reached. The breach of long-term support and the wave count pattern support this bearish sentiment. Nevertheless, traders should remain vigilant for a potential bullish reversal if the SOL price manages to exceed the previous wave one low. As always, market conditions can change rapidly, and it is important to monitor price movements and technical indicators for updated analysis.

Disclaimer: The above article is for informational purposes only and should not be considered financial advice. Trading cryptocurrencies involves risks, and readers should conduct their own research and consult with a professional advisor before making any investment decisions.

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