Here’s Why Bounce Will Succeed

Solana (SOL) price has reclaimed a minor support area and may soon break out of its descending resistance line.

The SOL has been declining since reaching an all-time high of $259.90 in November 2021. The downside movement has led to the June 2022 low at $25.86.

Although the solana price later recovered, it has returned to its lows once again, potentially forming a double bottom pattern. The double bottom is considered a bullish pattern, which means it could lead to a bullish reversal.

While the weekly RSI is in the process of creating a bullish divergence, it is yet to be confirmed. So, confirmation of the bullish pattern and bullish divergence would be enough to predict a reversal.

Conversely, it is worth mentioning that the SOL price has not yet reached an important support area. The main horizontal support area is at $22, formed by the Vic lows from April to August 2021 (green sign).

Therefore, the weekly time frame for Solana offers a mixed outlook, failing to lead to a solid SOL price forecast.

SOL price ready for fifth breakout attempt

A technical analysis on the daily Solana price chart shows that the SOL has been following a descending resistance line since Aug. So far, the line has been validated four times.

Since the lines weaken each time they are touched, price action suggests that an eventual breakout from the line is likely.

There are two other factors supporting the chances of SOL price breaking out: a bullish divergence on the daily RSI (green line) and a retest of the minor $28.25 support area.

If there is a breakout, the nearest resistance area will lie at $37.65. This is the 0.5 Fibonacci Retracement resistance level (white) and a horizontal resistance area.

Future price trend unclear

It is important to note that despite the bullishness from the daily time frame, the weekly chart’s indecision leads to an uncertain trend.

On the daily time frame, it appears that SOL price has completed an ABC corrective formation with a 1:0.618 ratio of waves A:C. This is in line with the bullish readings which support the breakout.

Later, a retest of the above $37.65 resistance area is a sign that the longer term trend is bullish.

Alternatively, a decline below the October low of $26.84 (red line) indicates that the trend is bearish, and a new yearly low is expected.

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