As the competition between Solana (SOL) and Ethereum (ETH) gains momentum in the cryptocurrency market, technical analysis points to the possibility of a significant correction in the SOL/ETH parity. Technical indicators and chart formations indicate that a difficult process may begin for Solana in the coming period.
The weekly chart of the SOL/ETH pair shows a striking rising wedge formation. This classic bearish signal indicates that market momentum is weakening and prices are trending down. In the rising wedge formation, the upper and lower trend lines are gradually converging, causing the upward momentum to wane. After a strong rally in 2023, the pair is now nearing the peak of the wedge. The weekly RSI indicator is also showing a decline from the overbought region, suggesting that prices could continue to decline. If the price breaks below the lower trend line of the wedge, a drop of around 40-45% is possible, with the price expected to fall to 0.03779 ETH.
SOL/ETH is currently trading well above its 50-week exponential moving average (EMA). This level is around 0.05057 ETH. If the price breaks below the EMA, bearish pressure is likely to increase. Furthermore, the decline in trading volumes also suggests that selling pressure could accelerate, supporting the current technical structure.
Ethereum$ETH
is forming an ascending triangle formation on its weekly chart, giving investors hope. The horizontal resistance level of the triangle, $4,000, has become a critical target for Ethereum in December. The RSI indicator is still in the neutral zone, which shows that Ethereum has the potential to rise further.
On the other hand, Solana’s price action against the dollar is more cautious. The SOL/USD pair is trading near the upper boundary of an ascending channel throughout 2024. Strong selling pressure is expected to develop in this resistance area, especially in the $210-268 range. If this resistance area has difficulty being overcome, the price is likely to pull back to the middle or lower boundary of the channel and reach the 50-week EMA at $145.