Solana Price Forecast: On-chain evidence suggests SOL will rise following correction

After finding support around $205.41 on Tuesday, Solana price recovers.
Due to SOL's rising daily trading volume and monthly high long-to-short ratio, on-chain data suggests recovery.

A daily candlestick close below $205.41 would disprove bullishness.
After a steep decline earlier in the week, Solana (SOL) price rebounds at $205 on Wednesday. As SOL's daily trade volume grows and the long-to-short ratio approaches a month-high, on-chain data suggests a rally.

Solana technical view, on-chain data suggest rebound
Solana hit a new ATH of $264.39 on November 22 and corrected. SOL fell more than 16% in 17 days, retesting its 61.80% Fibonacci retracement mark at $205.41, drawn from its August low of $110 to its ATH.

This region is a critical reversal zone since it is near the 50-day Exponential Moving Average (EMA) at $213.12 and daily support. SOL recovers to $220 on Wednesday.

Continuing support around $205.41 might push the cryptocurrency higher to retest its December 6 high of $247.

On the daily chart, the Relative Strength Index (RSI) is 46, below its neutral level of 50, indicating trader indecision. To restore positive momentum, the RSI must rise over neutral. Such such event would boost the recovery rally.

Solana's on-chain stats are good. Crypto intelligence tracker DefiLlama reports a significant increase in Solana chain trading interest and liquidity. The daily trade volume rose from $2.92 billion on Saturday to $5.99 billion on Wednesday, the most since November 20.

Coinglass reports SOL's long-to-short ratio at 1.03, the highest in a month. A ratio over one indicates that more traders expect the altcoin price will climb, supporting Solana's positive forecast.

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