The Solana (SOL) price is approaching a confluence of support levels near $17.50, which could initiate a significant bounce.
While the weekly timeframe readings are bearish, the daily timeframe suggests that a breakout and significant increase could follow soon.
Solana Price Approaches Range Low
The technical analysis of the weekly time frame reveals that in July, the SOL price broke free from a descending resistance line that had been in place for 609 days, sloping a decline from its all-time high price of $260.
Although there were expectations of a substantial increase in Solana’s price following the breakout, SOL encountered resistance at the $27 level. This led to a temporary move above it and a significant drop. This development is considered bearish and raises doubts about the validity of the breakout. Also, it reinforces the notion that the $27 level will continue to act as resistance.
Should the downward movement persist, the closest support area will be at $18, only 8% below the current price. On the other hand, the $27 resistance area is 40% above the current price.
Despite the breakout, the weekly Relative Strength Index (RSI) displays a bearish stance. The RSI serves as a momentum indicator that helps traders assess whether a market is in an overbought or oversold condition, guiding their decisions to buy or sell an asset.
Bullish conditions typically prevail when the RSI reading is above 50, and the trend is upward, whereas readings below 50 indicate the opposite. Although the RSI briefly rose above 50 shortly after the breakout (red circle), it is unlikely to dip below that level. This further supports the notion that the breakout may not have been legitimate, and the possibility of new lows emerging remains a concern.
Also, bankrupt exchange FTX transferred $10 million in Solana coins to the Ethereum network on September 4, raising concerns among investors.
SOL Price Prediction: Will Bullish Divergence Initiate Breakout?
The daily timeframe technical analysis suggests that the price could soon undergo a significant bounce, giving a bullish Solana price prediction. This possibility comes from both the price action and technical indicator readings.
As for the price action, SOL has traded inside a descending parallel channel since July 14. These channels often contain corrective movements. As a result, an eventual breakout from it is the most likely future price scenario.
However, the price still trades in the channel’s lower portion. If it continues to do so, it will reach an ascending support line at $17.50 next week. At the time, the line will coincide with the channel’s support line. The $17.50 level is 9% below the current price.
Afterwards, a significant increase can follow. This possibility is supported by the daily RSI, which is in the process of generating bullish divergence (green line). If this divergence transpires, it can cause a breakout from the channel. In that case, the price can increase by 40% and reach the $27 resistance area.
Despite this bullish Solana price prediction, a breakdown from the long-term ascending support line will mean that the trend is bearish. In that case, a 45% drop to the $10.50 yearly low will likely be the future price outlook.
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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.