Solana Price Extremely Overbought, Massive Correction In The Offing

Last Updated July 30th 2021
2 Min Read
  • Solana price soars more than 15%, cracking the barrier at $30.
  • A correction is underway amid oversold conditions reinforced by the RSI.
  • Holding to new support at $30 will ensure that the uptrend targeting $37.5 resumes.

Solana resumed the uptrend following July’s worst selloff to $22. As the uptrend resumed last week, investor sentiment skyrocketed. An ascending parallel pattern ensured that gains remained steady, while the most recent break above the 200 Simple Moving Average (SMA) may have triggered the upswing above $30.

Solana Faces Multiple Sell Signals

Following the uptrend above $30, the bullish leg stepped to $33. However, a correction was ensured before bulls charted the path to $37.5. Meanwhile, Solana trades at $32, while buyers focus on securing higher support, preferably at $30.

The ascending parallel channel’s middle boundary is in line to provide support and prevent losses from gaining traction. Similarly, the 200 SMA on the four-hour chart has turned into formidable support that may also be dependable.

It is worth mentioning that failure to hold these support areas could trigger massive sell orders. Any signs of a significant retreat could lead to an increase in investor panicking. Realize that the lift-off from $22 to $33 was substantial, and holders will likely take profits and avoid sinking into losses.

SOL/USD four-hour chart

 SOL/USD four hour chart

The Relative Strength Index (RSI) has a vivid bearish outlook, suggesting that sellers have the upper hand. A break above 70 marked Solana’s overbought conditions, warranting a correction. The RSI follows the trend of an asset and measures its momentum.

Note that movement toward the midline could stir massive declines. Besides, a daily close under $30 may validate the expected retreat. Other support areas to keep in mind include $28, $26, and $22.

Data shows that the number of Solana-related mentions on different social media networks surged in the past several days. The rising chatter around the token allowed it to gain traction from monthly lows of $22 to highs of $33.

Solana Social Volume

 Solana Social Volume

Increased attention is not necessarily a good sign for the continuation of the uptrend. When prices pump, and the crowd starts paying attention, then the dump usually follows shortly after. Therefore, increased crowd attention can be considered a leading indicator of a short-term price correction.

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