Solana has experienced a significant correction following a breakdown from a well-defined descending triangle pattern that had been forming over the past several weeks.
Currently trading around $164.93, SOL/USD appears to be attempting a recovery from the sharp decline that saw price drop from the triangle’s resistance near $175.62 to a low around $159.73. This technical setup suggests that Solana may be entering a critical phase where the sustainability of any bounce will determine whether the cryptocurrency can regain its footing or face further downside pressure.
The descending triangle breakdown has activated key Fibonacci retracement levels that are now serving as important reference points for traders. The recent decline from $175.62 to $159.73 has established a clear range, with the Fibonacci tool revealing critical levels where buyers might step in or sellers could reassert control.
The 38.2% retracement level sits at $165.60, closely aligned with current price action, while the 50% level is positioned at $167.67. A more substantial recovery could target the 61.8% Fibonacci level at $169.55, which coincides with previous support-turned-resistance areas.
Mixed Momentum Signals
The stochastic oscillator is currently displaying signs of potential reversal, having reached deeply oversold territory before beginning to turn higher. This oversold condition suggests that the immediate Solana selling pressure may be reaching exhaustion, potentially setting the stage for a short-term bounce. However, the oscillator will need to maintain its upward trajectory and break above key resistance levels to confirm that buyers are regaining control.
The MACD indicator presents a more cautious outlook, with both the signal line and histogram remaining in negative territory. The MACD line continues to trade below its signal line, indicating that bearish momentum persists despite the recent bounce attempt. For a more convincing recovery signal, traders will want to see the MACD begin to converge with its signal line or show signs of positive divergence with price action.
Moving averages are currently acting as dynamic resistance levels above the current price, with the shorter-term averages having crossed below longer-term ones during the recent decline. This bearish crossover suggests that the path of least resistance remains to the downside, although a sustained move above these moving averages could signal a shift in sentiment.
Next Inflection Points
The descending triangle pattern that preceded the current decline was characterized by lower highs connected by the descending trend line, while the horizontal support around $159.73 held firm until the eventual breakdown. This type of formation typically suggests weakening buying interest and often resolves with a decisive move lower, which appears to have materialized as expected.
The immediate resistance zone for Solana lies at the 38.2% Fibonacci retracement level around $165.60, which closely aligns with current price action. A break above this level would target the 50% retracement at $167.67, followed by the more significant 61.8% level at $169.55.
On the downside, the $159.73 low represents crucial support that coincides with the 0.0% Fibonacci level. A sustained break below this area could trigger another leg lower, potentially targeting the psychological $150 level or deeper support zones.
