Solana’s SOL token has rallied over 50% in the past month to around $76. However, there are signs the uptrend may be losing momentum, indicating a potential sharp sell-off ahead. Specifically, SOL’s relative strength index (RSI) indicator has been diverging bearishly from the rising price action by moving lower over the past few weeks.
Additionally, trading volumes for SOL have declined even as prices rose higher, another ominous technical development. SOL recently found support near $73, around its 0.236 Fibonacci level, but the risk is for a 40% decline toward its 50-day exponential moving average around $42 if the uptrend stalls out.
Some analysts view the short-term bearish signals as an opportunity for long-term investors to accumulate SOL at cheaper levels, rather than an indication of a broader crypto market top. Past corrections in SOL’s price have found support around an ascending trendline, currently around $40. The 0.786 Fib level near $55 is another area bulls could defend to keep SOL’s overall bull market intact.
However, a firm break below both those support levels would likely confirm a bearish trend change and open the door for more downside toward the $100 area to start 2024. For now, traders seem to be anticipating some consolidation or a relief rally back up toward $100, but the risk of a sharper selloff persists given the technical warning signs.
