Solana has experienced a 28.08% increase in its price over the last one week. However, recent technical indicators are hinting at a short-term correction at least.
In the meantime, Solana has down 4.68% in the past day, trading at $209.47 at the time of writing. Evai CEO Matthew Dixon said on X that although SOL overall trend is still strong, there are indications that the recent rise might not last.
Can
#SOL continue to push higher? – certainly Trend is your friend as they say. However, there are numerous signals flashing warning signs that $SOL may be due at least a short term reversal. Volume is not supporting the current high price and the wave structure still looks… pic.twitter.com/ndMJOKcdwG
— Matthew Dixon – CEO Evai (@mdtrade) November 12, 2024
Elliott Wave Analysis Suggests Corrective Pattern
Technical analysis of Solana’s price chart reveals an Elliott Wave pattern, a method used by traders to identify potential trend shifts. This wave structure suggests that Solana’s recent price movement may mark the completion of an upward corrective phase rather than the beginning of a prolonged rally.
The chart identifies an earlier peak labeled as Wave 3 in March 2024, with the current peak marked as Wave C, which may indicate the final phase of a larger corrective A-B-C pattern. Such patterns typically signal a potential downturn once they complete.
Dixon noted,
“The wave structure still looks corrective to the upside, meaning downward movement is likely.”
According to this interpretation, the current bullish formation for SOL might have reached its resistance level hence putting it more likely to reverse before long.
RSI Indicator Shows Bearish Divergence
The RSI, a widely used momentum indicator, is displaying signals that could suggest a weakening uptrend. Per now, Solana’s RSI is around 75.72, placing it in the overbought zone, which is generally above 70.
Source: X
Notably, there is a bearish divergence between price and RSI: while SOL’s price has been reaching new highs (from Wave 3 to Wave C), the RSI has been making lower highs.
This divergence often suggests that buying momentum is weakening even as the price continues to rise, which can be a warning of a potential reversal.
Read also: Bitcoin Whales Accumulate as BTC Price Makes History
Low Volume Raises Concerns Over Uptrend Strength
The past price rise has not been accompanied by an increased volume of trades; this makes experts question the current upward trend. Volume is the indication 0f the market backing a price move; normally, larger volumes back an uptrend.
Dixon pointed out that “volume is not supporting the current high price,” indicating that the demand behind SOL’s rally may not be solid enough to hold these levels.
Solana’s price is far above its 50-day moving average, which is around $153.48. Moving averages help identify trends and potential support or resistance areas. When the price is significantly higher than a moving average, it can signal that the asset may be overextended and due for a correction back to more stable levels.
This gap indicates that though SOL has exhibited a bullish run in the long term, a short term bearish bounce is imminent due to deviation from the moving averages.
Follow us on X (Twitter), CoinMarketCap and Binance Square for more daily crypto updates.Get all our future calls by joining our FREE Telegram group.
We recommend eToro
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more Visit eToro Now Active user community and social features like news feeds, chats for specific coins available for trading. Wide range of assets: cryptocurrencies alongside other investment products such as stocks and ETFs. Copy trading: allows users to copy the trades of leading traders, for free. User-friendly: eToro’s web-based platform and mobile app are user-friendly and easy to navigate.
The post Solana’s Rally at Risk? Key SOL Indicators Signal Possible Reversal Ahead appeared first on CaptainAltcoin.
