Solana price analysis: Is this the start of a new uptrend?
Solana (SOL) has been one of the worst-hit major cryptocurrencies during the current crypto bear market. From an all-time high of $260.06 on 6 November 2021, SOL dropped to $8.14 on 29 December 2022, a plunge of almost 97%, according to coinmarketcap data. Solana’s close connection with the collapsed FTX cryptocurrency exchange may have kept investors wary. However, that seems to be changing in the new year, as SOL has rebounded and is trading above $13 as of 5 January 2023.
The project received a boost when Ethereum’s co-founder Vitalik Buterin came out in its support, tweeting that “smart people” were saying solana had a “smart developer community” and “the chain has a bright future.”
Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future.
— vitalik.eth (@VitalikButerin) December 29, 2022
Hard for me to tell from outside, but I hope the community gets its fair chance to thrive????????
Another possible reason for the recovery in solana is the massive rally in Bonk, the first dog meme token launched on the network, on 25 December 2022. From its all-time low of $0.00000009847, made on 30 December 2022, BONK surged almost 50-fold to $0.0000048 on January 5 2023, according to coinmarketcap data.
Could solana go up further or will short-term traders book profits after the recent rally? Read the SOL price analysis to find out.
Solana price technical analysis: Weekly chart
SOL weekly price chart 5 Jan 2023 – Source: Capital.comSOL’s price has been in a strong downtrend for the past several months. The SOL/USD pair is currently attempting a rebound after dropping into single digits last week.
There is a minor resistance at $15, but if bulls overcome this obstacle, the pair could soar to the 20-week exponential moving average (EMA). This is an important level to keep an eye on in the near term, because a break and close above it could signal a potential trend change.
Although a sharp recovery is possible, the pair is unlikely to start a new uptrend in a hurry, because long-term downtrends are generally followed by a base-building process.
The bears are unlikely to let go of their advantage without a fight. They will try to protect the $15 level and pull the pair back below $10.
Solana price technical analysis: Daily chart
SOL daily price chart 5 Jan 2023 – Source: Capital.comBuyers have propelled Solana’s price above the downtrend line of the descending channel pattern. The 20-day EMA has started to turn up and the relative strength index (RSI) has risen into positive territory, indicating that the sellers may be losing their grip.
If buyers succeed in maintaining the price above the 20-day EMA, the up-move could resume and reach $18.54. This level may again act as a minor hurdle, but if crossed, the pair could reach $25.
Contrary to this assumption, if the price turns down and plummets below the 20-day EMA, it will suggest that the break above the channel may have been a bear trap. That could aggravate selling and pull the price to the psychologically important level of $10. A break below this level could sink the pair to $7.89.
Solana: Buy or sell this week?
Solana’s break above the moving averages suggests strong buying at lower levels. If bulls sustain the price above the 20-day EMA, the recovery could extend to $18.54. Conversely, if the price turns down and breaks below the 20-day EMA, it will suggest that the recent breakout may have been a bear trap. Solana’s price analysis suggests that the pair could then drop to $10.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.
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