Solana (SOL) investors find themselves on a rollercoaster ride as the cryptocurrency grapples with a significant correction, undoing half of the gains accrued over the past week. Currently trading below the psychological barrier of $200, SOL faces a bearish outlook, raising concerns for potential further corrections in the short term.
The recent surge in Solana’s price, increase since September 2023, was primarily attributed to Bitcoin’s bullish momentum and the overselling of SOL due to its association with the now-defunct crypto exchange FTX. However, despite last week’s remarkable 70% climb, the past five days have witnessed substantial rejection around the $200 mark.
Several factors contribute to this correction, with Bitcoin’s bearish trajectory, driven by a weekly sell signal, prompting profit-taking activities that typically trickle down to altcoins like SOL.
Moreover, technical indicators such as the bearish divergence observed in the weekly SOL chart, with the Relative Strength Index (RSI) forming a lower high despite SOL’s higher high, suggest a potential slowdown in momentum, signaling a looming reversal or short-term pullback.
While the current market conditions favor bullish trends, a reversal seems imminent, given SOL’s struggle to breach the $200 threshold, reminiscent of the bear market’s dead cat bounce in early November 2021. The premature flip of the $200 psychological level could pave the way for an uptrend continuation, contingent upon Bitcoin’s performance in the coming days.
As of now, the Solana price stands at $175.48, with indicators like the 1-Day RSI, KST, and MACD suggesting mixed signals regarding SOL’s future trajectory. While the RSI indicates that the current price remains below the overbought threshold, the KST trading below the signal line hints at a possible uptick in the near future, supported by the MACD’s potential bullish crossover.
