Solana price technicians hinted at a 40% crash in the new year
Solana's SOL (SOL) price could lose nearly half of its value in the coming weeks as a classic technical setup puts a 40% breakout in the play.
Bearish divergence limits Solana's upside hopes
As of December 19, SOL is trading at around $76.35, compared to a 50% drop from its local price a month ago.
However, the SOL rally lacked the momentum to continue its surge. Notably, the cryptocurrency's Relative Strength Index (RSI) dropped from 90 to 73 on the three-day chart, creating lower highs above the price.
A similar bearish divergence can be seen between rising SOL prices and declining three-day trading volumes. This may be an early warning sign that the current bullish trend is losing momentum.
In recent days, the price of SOL has stabilized around $73, a level that coincides with the 0.236 Fibonacci retracement line, which served as support in Q1 2022.
Therefore, the target price is a 40% decline to the 50-3D exponential moving average (EMA, the red wave) near $42 in January 2024, if a correction indeed follows SOL's bearish divergence signals.
Is the price of SOL in danger of a bull market?
At least according to independent analyst Cold Blood Shiller, Solana's bearish bias is a buying opportunity if the selloff occurs.
“These are signs that we are more likely to buy at a lower price, not some macro cryptocurrency top,” he said.
“The trends are still there, we still want to buy, we don't care much about the short side and we're getting some signs that we've been lucky enough to find some cheap coins in the market.”
In other words, the bearish sentiment in the Solana market could run its course around the 50-3D EMA, then retrace once again in Q1 2024. Solana's weekly timeframe chart provides a similar view.
In particular, Solana's market corrections weakened near upward trendline support. Therefore, a move to the trend line (around $40) may restore bullish sentiment. Traders can buy SOL near the 0.786 Fib line near $55, a resistance-support level.
Related: VanEck predicts 10,600% Solana price rally by 2030
To confirm a bearish trend reversal, SOL price must fall below these two support levels. If not, the price could rise to $100 by early 2024.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
