Quick gains for Solana [SOL], but here’s how far a breakout is
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.
- $35 is a strong resistance
- The bullish momentum of the past few hours might reverse over the next day
Bitcoin [BTC] managed to hold on to the $19.2k short-term support, and it was able to rise back above the $20k level too. This shift in lower timeframe sentiment saw many altcoins post small rallies. Solana was able to bounce swiftly from the lower timeframe range it formed over the past week.
Here’s AMBCrypto’s Price Prediction for Solana [SOL] for 2023-24
At the time of writing, it looked set for a move to $35. Yet, with Bitcoin under the $20.8k resistance, can buyers bet on a breakout for Solana? Or would they look to trade within the range?
The range lows see demand yet again
Over the past ten days, Solana has traded within a range from $32 to $34.8. Over the same time period, the mid-range value at $33.38 has also acted as support and resistance on multiple occasions over the past week.
Bitcoin’s surge from the low $19k-level the previous trading day helped turn SOL sentiment bullish. However, it must be remembered that the higher timeframe trend was bearish for SOL. Any move to the $35 region would more likely be a selling opportunity than a breakout.
The RSI shot above the 60-mark over the past few hours, and the Directional Movement Index also showed a bullish trend in progress. And yet, the trading volume was not exceptional over the past couple of days. Therefore, a trader can look to trade SOL based on the range extremities.
Dev Activity drops alongside Social Volume this past week
Since mid-September, the development activity has seen a drop. Yet, this hardly has any correlation with the price. A week before this drop, both the price and the development activity saw a sharp surge. Social volume, on the other hand, was a more concrete picture of whether users are excited about the asset or not.
Social volume behind Solana has dipped over the past week, and the price also saw a dip from $34 to $32. In the meantime, users can rest assured that SOL devs have not forgotten about it.
On the whole, the longer-term trend is not strongly bullish. In fact, the $35 region represented a fair value gap that has acted as resistance since mid-September.
At press time, buying SOL could be a bad risk-to-reward trade. Therefore, more risk-averse traders can look to enter a short position near the $34.8-mark and target the $32-lows.