The Solana (SOL) price failed to consolidate gains despite a breakout from the bullish pattern. This led to a sharp drop that began on June 5.
Price dynamics and wave analysis indicate that further declines are expected before SOL eventually bottoms.
Solana has fallen below long-term support
In the week of June 5-11, Project Solana (SOL) token was among the top losers among the top 10 largest cryptocurrencies by market capitalization. This was because the U.S. Securities and Exchange Commission () referred to BNB, Cardano, Solana and Polygon as securities in its lawsuits.
The Solana Foundation Project responded to the SEC claims, but it had no miraculous effect. Online broker said it will take SOL off the listing amid SEC complaints against Coinbase and Binance. Subsequently, the platform also said it would delist Solana (SOL) after the SEC lawsuit.
As the results of technical analysis of the daily chart show, SOL has been falling since April 17. The market formed a declining high on June 4 (red icon), after which the price accelerated the rate of decline. The result was a low of $12.80 on June 10.
This drop was significant because it also conditioned a bearish break of the horizontal support area of $17. Before the fall, this area was present on the chart from the beginning of the year. It is expected that in the event of a retest, it will once again offer resistance to the price.
The price is expected to be in the middle of the day.
Source: TradingView
The weekly RSI is giving mixed signals. The RSI is an impulse indicator used by traders to assess whether a market is overbought or oversold and helps to determine whether an asset is worth buying or selling.
A values above 50 and an uptrend indicate that the bulls still have the upper hand, and vice versa. In the case of SOL the RSI index is rising but it is still below 50. However, it is out of the oversold area (green circle), which is a sign of the beginning of a bullish trend reversal.
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SOL: When is the bottom?
The wave analysis of the daily chart also indicates that a further decline is expected. It shows that the price is approaching the top of the fourth wave within a five-wave bearish structure (black). The fact that price is trading in an area of confluence of resistance levels, horizontal and diagonal, confirms this probability.
If this analysis is correct, then SOL should fall to $10.42 (an external Fibo correction of 1.61 of the fourth wave).
Source: TradingView
Despite this bearish forecast, a rise in SOL above the first wave low (red line) of $18.72 would indicate that the trend is bullish.
In that case, the market could move to the next resistance at $23.