Potential 40% Plunge Looms for Solana Amid Bearish Divergence Signals
Summary:
The value of Solana (SOL) could potentially plunge by nearly 40% in the upcoming weeks, as indicated by current market trends and a bearish divergence. Recent fluctuations have seen the price rise by about 50% from $51 to around $76.35. However, the momentum required to sustain this uptrend appears to lack, potentially pointing towards a trend reversal. According to independent analyst, Cold Blooded Shiller, the bearish divergence might provide a buying opportunity if the expected selloff occurs, with a possible rebound expected around Q1/2024.
The current price trends of Solana (SOL) potentially hint towards a nearly 40% plunge in its value in the upcoming weeks, as projected by a classical technical framework. The restrained potential for progress is conveyed by a bearish divergence that emerged for SOL.
As of the 19th of December, SOL is being traded at an average of $76.35. This represents a roughly 50% increase over the past month from its previous stagnant price near $51. Yet, the momentum required to maintain this positive trajectory seems to be lacking for SOL. SOL's relative strength index (RSI) has dwindled from its previous 90 to a much less impressive 73 on its three-day chart, marking lower highs against the price that showed higher highs.
A separate bearish divergence can be observed between the increasing SOL price and the decreasing three-day trading volumes. This could potentially be a preliminary indicator of an impeding decline in the strength of the current uptrend, potentially leading towards a trend reversal.
Recently, the SOL price appears to have found a steady level around $73. This value aligns with its 0.236 Fibonacci retracement line, that previously acted as support in Q1, 2022. Therefore, if a correction does follow SOL's bearish divergence indicators, the bearish target price is expected to be a 40% reduction towards its 50-3D exponential moving average (EMA; the red wave) around $42 by January 2024.
The bearish divergence implicating Solana could present a purchasing opportunity if the expected selloff ensues, postulates independent analyst Cold Blooded Shiller. This divergence, he reveals, points towards the potentiality of lower prices, thus presenting a buying opportunity. He reminds that market trends are still going up and investors should still be looking to buy, without substantial worries about the short term.
That is to say, the Solana market's bearish sentiment might reach its culmination around the 50-3D EMA, leading up to a rebound in Q1/2024. Historical trends also demonstrate that Solana's market corrections typically culminate near a rising trendline support, thus a move towards this trendline (around $40) could revive bullish sentiment.
Without falling below these two support levels, SOL's price might see a rise to around $100 by early 2024. It remains absolutely essential though, for investors to undertake their own independent research before making any decisions, given the inherent riskiness of every trading move.
Published At
12/19/2023 6:22:12 PM
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