Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
The price of SOL has tripled since January.
It could face a correction due to a major metric divergence and a bearish pattern.
Solana [SOL] bulls should be ready for a possible impact due to an increasing RSI divergence and a bearish ascending wedge pattern on the daily time frame.
Read Solana [SOL] Price prediction 2023-24
SOL signaled a bearish rising wedge pattern and RSI divergence
Source: SOL/USDT on TradingView
SOL’s value has tripled since January, from $9 to more than $21. At the time of writing, it was trading at $24.35, but a devaluation could be likely in the coming days.
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SOL formed a rising wedge channel pattern – a typical bearish formation. In addition, the daily time frame showed increasing divergence from the RSI (Relative Strength Index), which could suggest that the current rally is a bull trap.
Therefore, SOL could drop to $19.06, a potential 20% plunge. But the downtrend could be slowed by the $24.15 and $22.68 support levels.
However, a daily candlestick close to the $27.81 resistance level would invalidate the bullish forecast. Such a rise could tip bulls to target the pre-FTX level of $36.89. Nevertheless, bulls have to take the hurdle at $30.80.
Notably, On Balance Volume (OBV) recently reached similar lows, indicating limited trading volume to drive SOL’s upside momentum. Therefore, bears can be tipped to devalue the asset.
SOL’s development activity picked up, but sentiment was bearish
Source: Sentiment
According to Santiment data, the Solana network continues to grow as evidenced by rising development activity. The trend could assure investors of its stability and improve its long-term value as investor confidence improves.
However, investor confidence was worryingly flawed at the time of writing, as evidenced by negatively weighted sentiment. In addition, the Funding Rate was positive but negligible, indicating limited demand for SOL in the derivatives market.
Therefore, overall bearish sentiment could weigh on bulls’ efforts and undermine additional bullish momentum in the coming days. This could lead to a likely price correction.
However, a bullish BTC could tip SOL bulls to target the November highs, invalidating the above bearish bias.
This post Solana’s bull trap threatens to lower SOL by about 20%
was published first on https://ambcrypto.com/solanas-bull-trap-risks-pushing-sol-down-by-about-20/
