Solana (SOL) Hits New Yearly High of $79.50, but Signs of Weakness Emerge – Is a Local Top Near?

The Solana (SOL) price has experienced a parabolic surge since October, achieving a new yearly high of $79.50 on December 15. While this impressive rally has garnered attention, analysts are now scrutinizing lower time frames for signs of potential weakness. The key question arises: is a local top imminent, or will SOL continue to push to new highs?

Solana’s Recent Price Movement:

SOL’s price trajectory has been confined within an ascending parallel channel since the beginning of the year, with both the resistance and support trendlines repeatedly validated. However, in November, SOL broke out from the channel’s resistance trendline, leading to an accelerated increase and the establishment of a new yearly high.

Despite the impressive surge, analysts are noting some concerning developments in lower time frames that warrant attention.

Bearish Divergence and Analyst Perspectives:

The Relative Strength Index (RSI), a momentum indicator, has entered the spotlight, signaling potential weakness. Bearish divergence, characterized by a momentum decrease accompanying a price increase, is observed in the RSI readings.

CryptoPoseidonn expressed a cautious stance, suggesting that while the market structure is still holding, the possibility of a generational top exists. He indicated a readiness to short SOL but emphasized waiting for a 4-hour trend break for confirmation.

CryptoBusy remained undetermined, emphasizing the significance of the $78 level. The analyst urged patience to observe SOL’s reaction to this level before considering trades. A decisive break and confirmation above $78 could pave the way for further increases to $90 and $107.

Elliott Wave Theory and Price Predictions:

Technical analysts often employ the Elliott Wave theory to identify long-term price patterns and investor psychology. The current wave count for SOL suggests it is in the third wave of a five-wave upward movement, with wave three extending and having 2.61 times the length of wave one. This scenario implies the possibility of a top being in place.

Considering the bearish divergence in the daily RSI and other technical factors, a short-term correction of 25% to the 0.382 Fibonacci retracement support level at $55.60 is posited. However, a close above $73 could indicate an extension of wave five, potentially driving SOL to the next resistance at $95.

As the SOL market navigates these dynamics, investors and traders are advised to monitor key levels, market structures, and potential trend breaks for informed decision-making amid the evolving cryptocurrency landscape.

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