Solana experienced a bullish breakout from the channel. The daily timeframe indicates that SOL has been in a downward trend within a descending parallel channel since December 25, 2023. On January 23, the price dropped to a low of $79.
Following this, Solana saw a rise and broke out of the channel five days later. However, it was unable to surpass the key horizontal resistance area and was subsequently rejected. Currently, the price is returning to the resistance trend line of the channel.
Source: TradingView
In October 2023, the daily relative strength index (RSI) rose above the neutral level of 50 (red icon) when the price rally began. In January 2024, it fell below 50 (red circle), but has now crossed above that level again. The behavior of the RSI will likely play a pivotal role in determining the future trend, whether it continues to rise or falls below 50.
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Elliott wave analysis on the daily timeframe also does not provide a clear indication of the trend direction.
The most probable wave scenario suggests that wave three concluded at the December 2023 high discussed previously. However, it remains uncertain whether the fourth wave has already completed or is still developing.
While the Solana price reached the 0.382 Fibonacci retracement level, this wave was considerably shorter in duration compared to the third wave.
Altcoin Sherpa, a cryptocurrency trader, also lacks confidence in predicting the future trend. He states:
“I am not actively trading this asset and believe it will be a major winner in 2024. However, I have conflicting thoughts about its medium-term movement. I have the notion of a double top at $120. But if the price fails to stay above $100, I believe we might see $70.”
As previously mentioned, Solana’s behavior around the $100 mark and the RSI’s movement above or below 50 can strongly impact the direction of the future trend.
Source: TradingView
If the fourth wave has not yet completed, SOL could potentially drop an additional 30% to the 0.5 Fibonacci retracement level at $69. On the other hand, if the fifth wave has already initiated, the price is expected to rise by 45% to the next resistance level at $140.
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