Solana (SOL) reached a high of $51 today, marking the culmination of a 25-day parabolic rally. The $50 barrier has not been breached since May 25, 2022.
While the weekly and daily timeframe Relative Strength Index (RSI) are overbought, they both still support the continuation of the increase. Despite this bullish SOL price prediction, failure to reach a weekly close above the $50 area can halt the upward move and cause a drop.
Solana Reaches Long-Term Resistance
The SOL price has increased swiftly since breaking out from a long-term descending resistance trend line and validating it as support in September (green icon).
The rally has been sharp, and the SOL price has not experienced any retracement. During the upward movement, the SOL price increased above the $27 resistance area. It is now increasing above the $50 resistance area. While SOL moved above it, it has yet to reach its weekly close.
Relative Strength Index (RSI) Analysis
Market traders use the Relative Strength Index (RSI) as a momentum indicator to identify overbought or oversold conditions and to decide whether to accumulate or sell an asset.
- Readings above 50 and an upward trend indicate that bulls still have an advantage.
- Readings below 50 suggest the opposite.
The indicator is above 50 and increasing, both signs of a bullish trend. Even though the RSI is overbought (green icon), it has not generated any bearish divergence yet, a warning of an impending price decrease.
SOL Price Prediction: How Long Will Increase Continue?
Technical analysts employ the Elliott Wave theory to identify recurring long-term price patterns and investor psychology. This helps them determine the direction of a trend.
The daily time frame count supports the continuing increase. It suggests that SOL is in wave three of a five-wave upward movement (white). Wave three is often the sharpest and longest out of the bullish waves.
Cryptocurrency trader Bluntz_Capital has an extremely bullish view on SOL, stating:
“FTX has been selling between 250k-700k SOL every day for the last two weeks while the price has either been going up or sideways. So far, it’s been getting absorbed like a champ and at the current rate, their unlocked tokens should be depleted within a week. Once this seller is gone, I can only imagine how hard it’s gonna pump.”
The daily RSI also supports the increase, since it is increasing and has not generated any bearish divergence.
Since wave three already has 1.61 times the length of wave one, the next most likely target is the 2.61 length at $67. The target is 33% above the current price.
Despite this bullish SOL price prediction, failure to close above the $50 horizontal resistance area can trigger a 20% drop to the closest support at $40. However, this would not invalidate the bullish count. That would only happen with a decrease below the wave one (red line) high of $32.13. In that case, SOL will decrease by 50% to the long-term support at $27.