Coinspeaker This Solana Metric Flashes Overvaluation, Can SOL Price Cross $200?
Solana, the Ethereum Layer-1 competitor, has outperformed Bitcoin and the rest of the altcoins space throughout this month of October with 15% gains. SOL price SOL $179.4 24h volatility: 2.6% Market cap: $84.43 B Vol. 24h: $4.70 B is now trading at a crucial junction around $180 while eyeing a rally to $200 and above. However, one metric points to overvaluation which might put some breaks to the Solana rally.
One important indicator suggesting a potential pullback for Solana is the Chaikin Money Flow (CMF). This metric assesses the buying and selling pressure for the altcoin.
A declining CMF, particularly during a price increase, indicates weakening buying pressure. In contrast, a rising CMF amid an upward trend signifies strong buying support. Additionally, the CMF helps identify whether an asset is overbought or oversold.
Whenever the CMF reading is above 0.20, it indicates an overbought condition while a reading under -0.20 reveals an oversold condition. For Solana, the CMF reading has now reached 0.28 which shows that the upward price movement has received sufficient buying volume. This also shows that the buying pressure remains overheated raising doubts on whether the SOL price can continue the rally further to $200.
Courtesy: TradingView
Another index that is the Money Flow Index (MFI) puts some caution for investors. Currently, the MFI has exceeded a reading of 80.00, indicating that SOL is overbought. Conversely, a reading below 20.00 would suggest oversold conditions. This shows that the Sonala price rally needs to cool down a bit before any major surge happens upwards.
Courtesy: TradingView
The Possible Solana Price Action Ahead
Currently, the broader market sentiment is quite bullish for Solana (SOL) with many traders seeing it as a potential competitor to Ethereum ETH $2 632 24h volatility: 4.2% Market cap: $316.86 B Vol. 24h: $21.61 B in the longer run. The SOL price has successfully retested the $180 level after a breakout from its ascending triangular pattern.
Courtesy: TradingView
However, while SOL may have the potential to rise, the supply zone at $185 is likely to exert downward pressure on its value. The last time SOL reached $185, it experienced a 30% correction and has not returned to that level since.
This doesn’t rule out the possibility of Solana hitting $200, but before that occurs, the overhead resistance could cause the price to retreat to $161.81 before making another attempt to climb higher. However, if the bulls manage to sustain past $185, it could straight up lead to a rally to $200.
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This Solana Metric Flashes Overvaluation, Can SOL Price Cross $200?
