Solana (SOL) broke above a critical resistance level that had limited its recovery attempts multiple times during the November 2021-March 2022 price correction, raising hopes for further upside in April.
Solana flips key resistance to support
To recap, SOL’s price suffered extreme setbacks testing its multi-month declining trendline in recent history.
For example, the SOL/USD pair fell 60% two months after pulling back from the mentioned resistance level in December 2021. Similarly, it had fallen over 40% on a similar pullback move, led by a sell-off near the trendline in November 2021.
But Solana flipped the resistance trendline as support (S/R flip) after breaking above it on March 30, accompanied by an increase in trading volume that showed traders’ conviction in the breakout move. In doing so, the price of SOL surged 25% to $135, which brought the $150 psychological resistance level within reach.
Why is SOL (technically) bullish?
From a technical perspective, SOL’s breakout move above its falling trendline resistance coincided with a bullish crossover between its two main moving averages: the 20-day exponential moving average (20-day EMA; the green wave) and the 50-day EMA (the red wave).
The technical indicator, known as the golden cross, occurs when an asset’s short-term moving average jumps above its long-term moving average. Traditional analysts view this crossover as a buy signal.
For example, the August 2020 20-50 EMA crossover may have helped propel the price of SOL by more than 650% to above $267, alongside other fundamental and technical catalysts. As such, the golden cross increases the likelihood of SOL continuing its rally as well as its breakout above the falling trendline resistance.
The upside prospects continue to rise if a technical fractal highlighted by Delphi Digital is to be believed.
The crypto research firm highlighted a correlation between the price of SOL and the combination of its two technical indicators: the S/R flip and the relative strength index (RSI) divergence.
Specifically, the first time Solana’s RSI jumped above 70, an “overbought” area, after a strong price uptrend – which caused it to break above that period’s descending trendline support as well – SOL tended to continue to rally, though its RSI lower or sideways consolidated.
For example, SOL surged 378% after its RSI broke above 70 for the first time in August 2021. Similarly, the period of an overbought RSI from May to June 2021 also coincided with Solana’s 268% move higher. The fractals have appeared similar to SOL lately, Delphi Digital suggested.
Related: Opera integrates Bitcoin, Solana, Polygon and five other blockchains
Therefore, SOL/USD could continue its uptrend if using the Fibonacci retracement levels drawn between a high of $261 and a low of $77.50, suggesting $147-150 as a preliminary upside target.
Conversely, a pullback at or before testing the $147-150 range may result in SOL retesting $120 as tentative support with a possible slide towards the 20- and 50-day EMAs.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
https://cointelegraph.com/news/solana-jumps-past-key-selloff-junction-sol-price-eyes-150-in-april The SOL price is $150 in April