Solana Price Analysis: SOL Bulls Losing Their Edge as Breakdown to $23.5 Lingers
- Solana price bearish outlook confirms impending breakdown to $23.5.
- A rising wedge pattern catalyzes the sell signals in the four-hour timeframe.
Solana price has broken the weekly winning streak that had gradually formed an uptrend. As overhead pressure looms, losses aiming to explore price levels toward $20 become apparent.
Meanwhile, SOL is exchanging hands at $32 after suffering rejection from a massive seller congestion zone at the 200 Simple Moving Average (SMA) on the four-hour chart. Several other tentative support areas have caved in, including the 100 SMA and the ascending wedge pattern.
How far will Solana price downswing go?
Solana is trading at the apex of an ascending wedge pattern, suggesting that a reversal is in the offing and may appreciably gain momentum. This bearish outlook forms when an asset's price ascends with pivot highs and lows while converging at a single point referred to as the apex.
A breakdown occurs before the trend lines meet. The typical breakdown is mainly defined by decreasing volume (highlighting a divergence between volume and price). Breakdowns are generally fast and drastic and have a target equal to the distance between the widest points, as illustrated. Therefore, Solana may plunge 29% from the breakdown point to test levels around $23.5.
SOL/USD four-hour chart
The Moving Average Convergence Divergence (MACD) is a momentum oscillator utilized in trading trends but rarely used to identify overbought and oversold conditions. Note that the crossover of these two lines is a trading signal resembling that of the moving average system.
When the 12-day Exponential Moving Average (EMA) crossed below the 26-day EMA, a bearish signal emerged, compelling investors to sell. Similarly, as the MACD crosses below the mean line (0.00), the bearish narrative is validated.
Looking at the other side of the fence
The Relative Strength Index (RSI) reinforced the pessimistic outlook as it explores the levels toward the oversold region. However, the gradual slope suggests that the freefall is unlikely to be drastic. This may allow bulls to take advantage of the lower prices and speculate gains above $40 in the coming sessions, thus invalidating the looming breakdown to $23.5.