This technical analysis article explores the price movements of Solana (SOL) by examining its daily chart, daily RSI, and weekly chart, providing insights into potential support and resistance levels and highlighting bullish indicators for future price movements.
Solana (SOL) is a cryptocurrency that has gained attention recently due to its alleged classification as a security by the US Securities and Exchange Commission (SEC).
In this technical analysis, we will examine the daily chart, daily RSI, and weekly chart to gain insights into SOL’s potential performance in the coming weeks.
Daily Chart
Taking a closer look at the daily chart, we can observe that SOL has dipped into a significant support block ranging from $18.20 down to $12.06. This block is derived from the trading range established in February 2021, where we experienced a retracement to $18.20 followed by a dip to $12.06. Subsequently, SOL exhibited an upward move, continuing into the bull market.
After approximately two years, SOL retested this support block twice before experiencing a third retest and dipping into the block once again. It is crucial for SOL to hold this support, as breaching the bottom of the block may lead to entering the next support block between $9.86 and $7.66, based on the trading range from February 2021. This range was briefly retested in January 2023.
Daily RSI
Analyzing the daily Relative Strength Index (RSI), we can see that SOL retraced down to a support level of 27.65. Historically, each time SOL reached this support level, it resulted in an upward move, as seen in January, May, November, and December 2022, as well as in June 2023. Therefore, this support level holds significance and may play a crucial role in SOL’s future price action.
Currently, a bullish divergence is unfolding, with the RSI forming a double bottom while the price action establishes a higher low. This bullish divergence typically suggests an impending upward move.
Furthermore, SOL might encounter resistance at a trendline, as observed in previous instances such as August and November 2022, April and May 2023, and most recently in June 2023. Traders considering a swing trade could consider taking profits at the top of this resistance level.
Weekly Chart
Examining the weekly chart, we notice the formation of an ascending support trendline, along with the descending resistance trendline mentioned earlier. When approaching the apex of these lines, there is a higher probability of witnessing a break to the upside.
Weekly Stochastic
The weekly Stochastic oscillator indicates that SOL is currently in oversold territory or attempting to recover from it, with the index below 20. This presents a favorable buying opportunity, similar to the one that occurred between November 2022 and January 2023.
Weekly RSI
The weekly RSI is also experiencing a pullback. Traders may consider targeting the previous descending resistance trendline that was breached in January 2023 but has yet to be backtested as potential support.
Final Thoughts
Based on the technical analysis of SOL, several key observations can be made. The token is currently testing a crucial support block on the daily chart, with potential downside risk if the block is breached. However, the daily RSI indicates a bullish divergence, suggesting a potential move to the upside.
On the weekly chart, SOL is approaching an apex where a breakout could occur. Additionally, the Stochastic oscillator and weekly RSI present buying opportunities and a potential backtest of the previously broken descending resistance trendline.
Traders and investors should carefully monitor SOL’s price action and take these technical factors into consideration when making trading decisions. It is essential to conduct further research and consider other fundamental aspects before making any investment choices.