- Solana risks a colossal breakdown to the 200 SMA on the four-hour chart.
- The SuperTrend indicator signals investors to short SOL as the bearish picture becomes apparent.
- Support at $25 could flip the bearish impulse to bullish as the Parabolic SAR moves under Solana.
Solana has recently soared to a historical high at $30, but the uptrend hit a barrier, explaining the ongoing consolidation. The dominating mundane trading may culminate in massive losses, as suggested by the Bollinger bands.
Solana’s Downtrend Catches Momentum
Solana trades at $26 after rejection from the all-time high. A consolidation period dominated the price action for more than a week. In the meantime, the Bollinger Bands on the four-hour chart emphasize the sluggish price action. In addition to that, the constriction of the bands points toward a possible breakout or breakdown.
Solana has already lost the Bollinger bands’ middle boundary support, adding props to the breakdown. The following tentative support sits at $25, close to the Bollinger bands’ lower edge. If lost, pressure will rise on the 100 Simple Moving Average (SMA). Sliding past this second support could trigger declines to the possible support at the 200 SMA around $20.
SOL/USD Four-Hour Chart
The Relative Strength Index (RSI) on the four-hour chart has a bearish divergence, validating the potential breakdown. A bearish divergence occurs when the RSI breaks away from the price, as illustrated on the chart.
An asset usually loses momentum as the divergence widens until it gets to a point the bulls camp is exhausted, giving leeway to the sellers. An increase in volume validates the correction that tends to follow.
The four-hour SuperTrend indicator has recently sent a signal to short Solana. This signal manifested in the hand flipping above the price and changed the color from green to red. The indicator follows the trend of an asset. A move above the asset’s price is a bearish signal, while crossing under signifies a bullish outlook. At the time of writing, the overlay predicts Solana’s potential to resume the downtrend.
SOL/USD Four-Hour Chart
Looking at the Other Side of the Picture
It is worth noting that the Parabolic SAR indicator gives a positive signal, which disagrees with the SuperTrend on the four-hour chart. The parabolas (dots) also track the trend of an asset’s price like a moving average does. Closing under the price is a bullish signal, while closing above is a bearish signal.
Meanwhile, the Parabolic SAR holds below Solana, implying that bulls are yet to give in. Besides, closing the day above support at $25 may see the uptrend resumed as bulls gaze toward $30.