Will SOL break out or continue to be bullish?

Solana (SOL) has suffered another drop after a broader market sell-off last month. SOL hit $35 for the first time in more than nine months in its southern orbit.

SOL daily chart

As alt squeezes between the falling wedge, the next few candles will be crucial to defining a breakout rally.

A close beyond the pattern will open the door to buying in the short term, provided the bulls increase purchase volume. At press time, SOL is trading at $39.27, up 6.23% over the past 24 hours.

The SOL’s depreciation from the $85 mark paved the way for a 62.5% weekly decline (May 5-12). As a result, it hit a nine-month low on May 12.

As selling pressure mounted, the alt saw a price decline between the limits of a falling wedge while approaching ten-month support at $38.

A potential bounce and a reversal could give SOL much-needed hope to break above the wedge. More often than not, a falling wedge setup is followed by a breakout up.

However, the downtrend in volume is likely to favor the bears in the coming sessions. Also, the baseline (green) of Bollinger Bands (BB) is still looking south and confirms the downside.

A close outside the wedge would suggest an alternative price to test the BB’s baseline. The bulls have not found a close above the fundamental level for almost two months. Any close outside of this line could act as an entry trigger with taking profit in the $50-$52 range.

Any pullback can trigger a break towards the $32-$34 range before a bounce is likely if the buyers turn down.

Theoretical basis

According to the oversold RSI outlook, the SOL could recover if the buyers hold their ground. The index, at press time, was trending slightly up after a bullish divergence last week.

Similarly, the higher lows on the CMF indicate a bullish divergence from the previous week’s price. But Aroon up (yellow) is lurking near the 7% level. Investors/traders can avoid making calls until Aroon up sees a strong northbound rally; investors/traders can avoid making calls.

The reversal pattern of the SOL, along with the bullish divergence on its indicators, could ease the selling pressure in the coming sessions. Investors/traders should wait for a close above the BB Baseline and improvements in the Aroon indicator before placing a call.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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