The Solana rally is finally winding down
After a prolonged period of growth, the Solana project token is starting to show signs of slowing down. The token’s price has been steadily rising since July 2023 when it broke through the descending resistance line. In September, it tested the same trend line as support, confirming its strength and accelerating its growth rate.
The upward momentum pushed the price to a December high of $126, representing a staggering 610% gain in just 105 days. Along the way, the token also surpassed the Fibonacci level of 0.382, which is a correction of the previous downward movement from its all-time high.
However, a recent decline caused the SOL price to drop below this Fibonacci level, turning the previous bullish breakout into a rejection. This indicates a potential shift in the market sentiment.
Source: TradingView
Despite the overbought condition suggested by the RSI momentum indicator, there are no clear signs of weakness or a bearish divergence that would indicate a possible top formation.
SOL forecast: waiting for a recovery above $100
A technical analysis of the daily timeframe suggests that the token is currently undergoing a corrective wave. Based on the Elliott wave analysis, the most likely scenario is that SOL is in the fourth wave of a five-wave upward movement. This is supported by the bearish RSI divergence observed during the $126 high.
The price recently reached the 0.382 Fib support retracement level at $86 and experienced a rebound. Some traders recognized the bounce, but were disappointed as their entry did not work out as anticipated.
If the fourth wave follows a typical pattern, it could form a symmetrical triangle. In that case, the bottom may have already been reached, and the price could consolidate within the triangle before breaking out in a bullish manner.
If this scenario plays out, the potential target for the top of the SOL upward movement would be around $180, which represents an 85% increase from the current price.
Source: TradingView
However, it is important to note that a bearish breakout from the triangle could lead to a 26% decline in SOL, bringing it down to the 0.5 retracement Fib support level at $73, completing the fourth wave.