Solana has been trading within a descending channel on the hourly chart, but recent price action shows signs of a potential reversal as the cryptocurrency bounced strongly off a key support level.
The current price of $148.53 represents a significant recovery from recent lows, suggesting that bulls may be regaining control.
Price action shows Solana recently experienced a sharp decline that found support around the $139-140 area. This level coincides with the 0.764 Fibonacci retracement level at $139.60, which has acted as a strong support zone.
Solana Recovery Gaining Traction?
Since then, Solana has staged an impressive recovery, climbing back above multiple Fibonacci levels including the 0.618 level at $141.52 and the 0.5 level at $143.07. Currently, Solana is trading near the 0.382 Fibonacci retracement at $144.63 and attempting to sustain momentum above this level.
Price is also approaching the descending trendline resistance that has capped previous rallies since late April, which could prove to be a crucial test for the bulls.
The 100 SMA (blue line) is positioned above the 200 SMA (red line), indicating that the path of least resistance might still be to the upside despite the recent correction. However, the gap between these moving averages appears to be narrowing, suggesting some potential weakness in the bullish momentum.
Looking at the oscillators, the stochastic is rising from the oversold region and moving toward overbought territory, signaling strengthening bullish momentum in the near term. This move is supported by increasing green histogram bars in the MACD indicator below, which is showing signs of a bullish crossover as the blue line appears ready to cross above the orange signal line.
Solana Eyeing Support Levels
If Solana can break above the descending trendline resistance, the next target would be the 0 Fibonacci level at $149.65, which also aligns with a previous resistance area. A successful breach of this level could open the path toward the $152.00 psychological level and potentially higher.
However, if sellers return and push the price lower, immediate support can be expected at the 0.5 Fibonacci level at $143.07, followed by the stronger 0.618 support at $141.52. A break below these levels could trigger a retest of the recent lows near the 0.764 Fibonacci at $139.60, with the 1.0 Fibonacci level at $136.49 serving as the final major support before a deeper correction might occur.
Traders should watch for candlestick patterns at the trendline resistance for clues about the next directional move. Long green candles closing above the descending trendline would signal continuation of the bullish momentum, while rejection candles could indicate another leg down for Solana.
Volume will be a critical factor to monitor, as increasing volume during upward moves would confirm the strength of the bullish reversal. Apart from that overall market dynamics, including sentiment in the crypto sector and broader financial markets, could be influential in sustaining or reversing trends.
