Solana (SOL) price analysis: SOL may have bottomed out

Solana could pick up momentum above the 20-day EMA

Contents

The crypto market remains in a firm bear grip as investors digest the 0.75% rate rise by the United States Federal Reserve, the biggest increase since 1994. While a few major cryptocurrencies are threatening to resume their downtrend, Solana bulls are trying to form a higher low by keeping the price above $30 as of 17 June 2022.

Investors seem to be buying the dip in Solana. CoinShares Digital Asset Fund Flows’ Weekly Report published on 13 June shows that institutional investors have ploughed $108m into Solana investment products in 2022, far more than any other individual altcoin.

Solana’s blockchain is fast and has low transaction costs, but a report by DeFi Safety, an independent DeFi rating firm, ranked Solana as the second-worst among the 15 chains it reviewed.

Investors seem to be withdrawing their coins from DeFi protocols after the collapse of the Terra ecosystem and talk of a crisis with the lending platform Celsius and the crypto venture capital fund Three Arrows Capital. The total value locked inside Solana smart contracts continues to fall and has slipped to $2.54bn, far lower than the high of $15bn seen on 9 November 2021, according to the Defi Llama.

Will strong buying by the bulls form a higher low in Solana? Could SOL go up? Read the SOL price analysis to find out what the charts suggest.

A candlestick chart showing the weekly SOL price analysis
Solana weekly chart analysis – Credit: Currency.com

 

Solana technical analysis: Weekly chart

SOL’s price has fallen for ten consecutive weeks, indicating that bears are in control. However, the one-way fall suggests that the selling may have been overdone in the short term. This increases the possibility of a relief rally in the next few weeks.

If the price rebounds off the current level, it could reach the 38.2% Fibonacci retracement level of $69, which is likely to act as a strong resistance. If bulls clear this hurdle, the SOL/USD pair could rally to the 20-week exponential moving average (EMA).

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Alternatively, if the price turns down from $69, it will suggest that the sentiment remains negative and traders are selling on rallies. The bears will then try to pull the pair below $25. If they succeed, the next stop could be $22 and later $20.

A candle chart showing the daily SOL price analysis
Solana daily chart analysis – Credit: Currency.com

 

Solana technical analysis: Daily chart

SOL’s price turned down from the 20-day EMA on 16 June, indicating that bears continue to defend the level aggressively. Although the downsloping moving averages indicate advantage to bears, the positive divergence on the relative strength index (RSI) suggests that the bearish momentum may be weakening.

The bulls are attempting to form a higher low at $28. If they succeed, the buyers will make another attempt to push the price above the 20-day EMA and signal a potential trend change. The pair could then rally to the 50-day simple moving average (SMA).

Contrary to this assumption, if the price turns down from the current level or the 20-day EMA, the possibility of a retest of $25 increases. A break and close below this support could signal the resumption of the downtrend.

Solana: Buy or sell at current levels?

The price turned down sharply from the 20-day EMA on 16 June but the bulls are attempting to form a higher low at $28. If the price turns up and breaks above the 20-day EMA, Solana’s price analysis suggests that a rally to the 50-day SMA is possible. This positive view could invalidate if the price turns down and breaks below $25.

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.

SOL to US Dollar
Daily change
39.1927
Low: 37.1613
High: 39.3579

Further reading

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