Is the decline in Solana (SOL) price a sign of things to come?

Solana (SOL) price broke out of a short-term structure, potentially warning of a deeper correction.

SOL is the native token of the Solana blockchain created by Anatoly Yakovenko. Since hitting an all-time high of $259.90 in November 2021, SOL price has declined below a long-term descending resistance. The downside movement reached the December 2022 low of $8.

In January 2023, the SOL token price skyrocketed after a 230% increase. However, it failed to break out of the $27 resistance area (red icon). This is an important level as it previously acted as a support since March 2021. Hence, it is now expected to provide significant resistance.

Furthermore, the area will soon coincide with the long-term descending resistance line mentioned above.

Lastly, the weekly RSI has also found resistance at the 50 line, which is common for breakdowns and retests. Therefore, the trend can be considered bullish only after Solana price breaks the $27 resistance area and the descending resistance line. In that case, there could be a move up to $47.

However, if the rejection continues, SOL price may again fall into single digits.

Will Solana (SOL) price sustain the bullish structure?

Technical analysis on the daily time frame shows that SOL price is trading at a very important level with a minor support at $20.30. Whether or not the price breaks this area will be crucial in determining the future trend.

If this happens, it would mean that the previous breakout was invalid. Furthermore, it will do the same for the RSI, which has diverged from its own bearish divergence trend line (green line). Then, the RSI will decline below 50, and the price could decline towards the $17.60 support area. This breakdown can happen in the next 24 hours.

On the other hand, a bounce and the formation of a higher low could result in another attempt to break out of the long-term resistance line.

Finally, the shorter six-hour time frame is showing that SOL price broke out of an ascending parallel channel. Since channels usually lead to corrections, this favors the possibility of further downside.

Consequently, the most likely wave count shows that SOL is in the C wave of the ABC conformational structure (black). Giving waves A:C will take the 1:1 ratio to a low of $12.90. Since this coincides with the 0.786 Fibonacci retracement support level (white) at $12.10, the entire $12-$13 area can be considered as support.

To conclude, the most likely Solana price forecast is a continuation of the decline towards $12-$13. It is not yet clear whether the price will drop further or not. On the other hand, a move above $27 would invalidate this bearish forecast and could catalyze an increase towards $47.

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