Solana price analysis (7 September): is a top close by?

Solana is in an uptrend, but could soon start a correction

Solana symbol on vibrant chart background                                 
Solana is showing an overextended rally – will it result in a pullback? – Photo: Shutterstock
                                

Solana has emerged as a major competitor for ethereum. Its market capitalisation has surged from about $6.20bn on 20 July to more than $52bn today, according to Coinmarketcap. This shows its massive rise within a short time.

Solana’s website claims it to be “the world’s fastest blockchain, with an average cost per transaction of $0.00025”. Some believe these advantages may help solana (SOL) grab market share from ethereum in the non-fungible tokens (NFTs) and the decentralised finance (DeFi) spaces.

According to Bloomberg, Antoni Trenchev, co-founder of crypto credit lines provider Nexo, wrote in an email: “Solana has a growing ecosystem. Projects are being built on it and it’s benefitted hugely from the mania that’s taking place in NFT.” 

The institutional investors also seem to be warming up to Solana. According to the CoinShares Digital Asset Fund Flows report, Solana witnessed inflows of $13.2m last week, which boosted its assets under management from $15m in the previous week to $44m in the week ending 3 September.

Yuriy Mazur, head of data analytics at cryptocurrency exchange CEX.IO, told Cointelegraph in an email that, while he recognised Solana’s potential: “It has a long way to go in terms of becoming a major DeFi and NFT infrastructure... However, to sustain its growth, better upgrades and features must be unveiled to beat competition from other blockchains, including Cardano and Ethereum.”  

Even after its recent massive rally, will the price of SOL go up in the next few days? What do the charts suggest? Read our solana price trend analysis to find out.

Solana price technical analysis: weekly chart

Solana weekly price and RSI
Graph: Currency.com
Solana daily price chart and RSI
Graph: Currency.com

Solana’s price has soared from $22.10 on 19 July to an all-time high of $195.48 today. According to coinmarketcap, the SOL/USD pair has risen over 50% in the past seven days.

This sharp rally has pushed the relative strength index (RSI) deep into the overbought territory. Vertical rallies indicate frenzied buying, which is usually not sustainable. But it is difficult to call a top, as traders chase prices higher because of their fear of missing out.

However, when the uptrend stalls, traders rush to the exit. Therefore, sharp rallies are generally followed by equally strong declines. Traders should be careful and trail their positions with a suitable stop-loss approach.

The solana price weekly analysis shows the bulls are in command, but the RSI warns that the rally could be overextended in the short term and ready for a pullback.

Solana price technical analysis: daily chart

The bears are currently attempting to stall SOL’s rally at the psychological mark of $200. The RSI above 88 also suggests that the pair is due for a consolidation or correction in the next few days.

If the price turns down from the current level, the first support on the downside is $150. If the pair rebounds off this level, it will suggest that the sentiment remains positive and traders will continue to buy on every minor dip.

The bulls will then make one more attempt to push the price above $200. If they succeed, the uptrend could extend to $250.

On the other hand, if the $150 support cracks, the bulls may book profits aggressively. That may pull the price down to the 38.2% Fibonacci retracement level at $122.45 and then to the 50% retracement level at $103.39. The deeper the decline, the longer it will take for the uptrend to resume.

How to trade solana this week

Solana is in a strong uptrend but the rally is overextended in the short term. Waterfall declines usually occur after strong rallies. When the correction starts, it may be vicious. Therefore, traders should be careful with their positions and should not chase prices without keeping a suitable stop-loss.

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 advisor before arriving at a decision. 

Further reading

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