TA of the Day: Solana’s Surprising Comeback! What’s Next for SOL After Crypto Market Turmoil?

Cryptocurrencies It has seen a recovery from Monday’s massive sell-off, with Solana (SOL) leads the charge.

Solana (SOL) has emerged as a strong competitor in the cryptocurrency market, often referred to as the “Ethereum Killer“.”

Despite recent volatility, Solana offers compelling reasons for crypto traders to consider adding it to their portfolios.

1. Strong fundamentals

Solana is one of the fastest blockchains, capable of processing over 65,000 transactions per second.

This expansion supports a growing number of decentralized applications (dApps) and users, highlighting the platform’s strong fundamentals.

Key metrics, such as increased active users and decentralized exchange (DEX) volume, underscore Solana’s potential as a sustainable player in the crypto space.

2. Undervalued compared to Ethereum

Solana’s market cap is currently only 22% of Ethereum’s.

As Solana continues to grow and gain adoption, this gap with Ethereum may narrow, potentially leading to a significant upside.

3. Active on-chain activity

Solana shows consistent strength in on-chain activity, with high transaction volumes and user engagement.

The platform is expected to see further growth, especially with the expected upgrades and new features set to be revealed at the upcoming Solana developer conference, breakpoint.

4. Growing Ecosystem

The Solana ecosystem is rapidly expanding, attracting developers, projects, and investors.

This growth boosts demand for SOL tokens and enhances the platform’s network effect, boosting its overall value.

5. Institutional trust

Solana has gained the trust of traditional finance (“TradFi”), with institutional investors viewing it as a low-risk asset with high upside potential.

this support This adds credibility and security to Solana, making it an attractive option for a wide range of investors.

Bullish base case:

Solana blend of Speed, scalability and growth potential It makes it stand out in the cryptocurrency market.

Its current low value compared to Ethereum, coupled with strong on-chain activity and a growing ecosystem, makes a strong case for investment.

For those looking to invest in a cryptocurrency with strong fundamentals and significant upside potential, Solana is worth considering.

The fundamental data is positive, but what about the technical data?

Welcome to Teaching Assistant of the Day (TAOTD)! 👋

Let’s focus on the current technical setup of the SOL/USD pair based on the daily chart:

📈 Technical analysis of the SOL/USD pair on the 1-day chart

Solana has seen a rapid rise, followed by an equally rapid decline, and is now showing signs of stabilization or a possible recovery.

Using the technical analysis concepts we covered in our Forex course, let’s analyze Sol/US Dollar.

Simple moving averages:

• 10 period simple moving averageIt is located at the level of 152.70. The current price above This level indicates short-term bullish momentum. The slope is To the topindicating a possible recovery in the short term.
• 50 period simple moving average: It is located at 152.05. The price is a little high. above This level, which reinforces the short-term bullish momentum. The slope is slightly lower. Downreflecting previous weakness, but the recent move above this level may indicate a shift in sentiment.
• 100 period simple moving averageIt is located at the level of 154.74. The current price is only above This level indicates a temporary upward trend in the medium term. The slope is Downreflecting continued weakness in the medium term.
• 200 period simple moving averageIt is located at 146.86. The price is: above This level indicates long-term bullish momentum. The slope is To the topconfirming the strength of the long-term uptrend.

Relative position of moving averages:

• the 10 period simple moving average He is currently above the 50, 100 and 200 period simple moving averagesindicating a short-term bullish crossover within a broader consolidation process.
• the 50 period simple moving average He is above the 200 period simple moving averageforming a golden cross, which is generally considered a bullish signal, but it is slightly below the 100-period simple moving average, indicating some uncertainty in the medium term.
• the 100 period simple moving average He is above the 200 period simple moving averagereinforcing the long-term uptrend.
• The widening gap between the 200 simple moving average and the other simple moving averages indicates increased volatility in recent months.

Relative Strength Index (RSI):

• Relative Strength IndexThe current reading is 49.63, indicating that the market is in a neutral This suggests that the price may face a consolidation phase before making any decisive move.

Volume analysis:

• The recent price action was accompanied by a significant increase in volume, indicating strong participation and a potential change in market sentiment.
• High volume on the recovery day indicates strong buying interest at lower levels, which could support further upside.

🕵️ Key Notes

Price action:

Let’s analyze the recent price action of the SOLUSD pair:

1. sharp rise: The chart shows a significant upward movement from late July to early August, with the price rising from around 140 to a peak near 190.
2. New local high: This rally made a new local high on the visible time frame, reaching below 190.
3. Rejection at the peak: Upon reaching this peak, there is a clear rejection with a long upper wick on the candle, indicating that sellers are stepping in at these high levels.
4. Quick reflection: After reaching the peak, we observe a sharp reversal with a series of red (bearish) candles. This reversal is characterized by candles with long bodies, indicating strong selling pressure.
5. steep slope: The price quickly fell from a peak near 190 to a low around 141, erasing most of the gains from the previous rally.
6. Increased volatility: The size of the last candles, whether bullish or bearish, indicates high volatility in the pair.
7. Rebound from the low: After hitting a low of 141, there is a notable bounce, with the price recovering to current levels of 156.
8. Current frequency: The last candles show some recovery, but with large upper wicks, indicating selling pressure at higher levels.

Support and resistance levels:

• SupportsImmediate support is located at 146.86 (200-period simple moving average) and 154.74 (100-period simple moving average).
• resistanceImmediate resistance is located at 152.70 (10-period simple moving average) and 152.05 (50-period simple moving average).

Moving averages:

• The 10 and 50 period simple moving averages are currently acting as resistance, while the 100 and 200 period simple moving averages are providing crucial support.
• A tight cluster of short-term moving averages indicates a potential consolidation phase, which may precede a major price move in either direction.
• Watch for breakouts above or below this range for potential trading signals.

Relative Strength Index:

• The presence of the RSI in the neutral zone indicates a possible consolidation before the next major move.

Market structure:

• Recent swing highs and lowsThe chart shows lows around 120 in early August and lows around 180 in late July, followed by a recent high around 162.
• broken frameThe stock price rose significantly above the previous swing high of 118 in late February, indicating a continuation of the uptrend. The market has been volatile since then.
• Change personality (chouch)The bullish wave occurred when the price fell below the previous low at 1645, causing the market behavior to change from bullish to bearish. The price will need to reclaim this price level for the bullish wave to change back to bullish.

🤔 Possible trade scenarios

He is Buy or sell Solana?

The following trading scenarios are provided for educational purposes only. Since they do not include full risk management practices, they are not intended to serve as actual trading recommendations, but rather as food for thought to help you generate your own trading idea.

Long bias:

• Entry pointConsider entering a long trade if the price finds support near 146.86 (200-period SMA) or 154.74 (100-period SMA) and shows signs of a bounce, such as a bullish candlestick pattern or positive divergence on the RSI. Additionally, a break above the resistance level at 162 could signal a potential rally back to 200.
• Stop lossConsider setting a stop loss below the support level at around 140 to manage risk.
• goalWe expect a move towards the 180 level and above if the uptrend resumes.
• RationaleTargeting the 180 level depends on the previous resistance level, which may act as an important level for taking profits. If the price is able to penetrate this level, this indicates strong upward momentum and the possibility of further increases.

Short bias:

• Entry pointConsider entering a sell position if the price fails to hold the support level at 146.86 (200-period SMA) and 154.74 (100-period SMA) and shows signs of bearish momentum, such as a strong bearish candlestick pattern or the RSI moves below 40.
• Stop lossPlace a stop loss above the recent high at 162 to manage risk. This level is very important as a break above it would invalidate the bearish setup.
• goalThe initial target could be the support level at 130. If the downward momentum continues, expect further decline towards 120 or lower.
• RationaleThe initial target is at 130 as it is a psychological and historical support level. If the price breaks through this level, it will indicate further bearish momentum and the possibility of a further significant decline towards the next support level at 120.

📝 TAOTD Summary

• Current status: Solana has seen a rapid rise, followed by an equally rapid decline, and is now showing signs of stabilization or a possible recovery.
• directionThe long-term trend appears to be bullish with price above the 200-period simple moving average, but the short- and medium-term trends are showing signs of recovery after recent weakness, with price currently challenging the 10-period and 50-period simple moving averages.
• Main levelsSupport is at 146.86 (200-period simple moving average) and 154.74 (100-period simple moving average), and resistance is at 162 (recent high). Other key levels to watch include the recent swing high near 190 as resistance and support at 140-145.
• batchThe RSI is indicating a neutral condition, indicating that consolidation may occur before the next major move.
• Market structure: This market structure indicates that while the overall trend is up, the price is currently in a potential correction or consolidation phase.
• Volume analysisThe high volume during the recovery day indicates strong buying interest at lower levels, which could support further upside.

This recent price action indicates a major shift in sentiment from strongly bullish to bearish and then to a more bullish trend. Neutral position.

The price is currently in a recovery phase after a sharp correction, testing the resistance. Set of moving averages As potential support/resistance.

A break above recent highs may indicate a continuation of the uptrend, while a break below key support levels may indicate a more significant change in market structure.

Price action around the current moving averages cluster (150-155) may determine the short-term trend.

⚠️ Remember that this analysis is based only on the technical aspects shown in the chart. In the cryptocurrency market, fundamental factors, global liquidity conditions, general risk sentiment in financial markets, random statements by politicians, and regulatory news can have significant impacts on the price. Always keep these factors in mind and use proper risk management in your trading decisions.

This content is for informational purposes only and does not constitute investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to ensure you understand the risks involved.