Solana (SOL) experienced a market-wide correction on Sunday night, which pushed its price down to a level that is crucial for future price action. Since late December 2022, SOL has been forming an ascending trend line on the 1-day chart, which could lead the price back into bullish territory. SOL had already tested the trend line in recent days, resulting in a decent bounce to the upside. However, the recent price action caused SOL to fall back to the trend line. Still, the 4-hour chart shows that SOL has remained above the trend line, indicating strength and a bullish outlook.
The recent retracement has also caused Solana’s Relative Strength Index (RSI) to reset on the 4-hour chart. With the RSI hovering near the overbought zone at 68, the reset to 41 indicates a healthy pullback, maintaining the 4-hour chart’s bullish outlook. A look at the 1-hour chart similarly reflects a strong picture for SOL’s bulls. Today’s challenge is to close above the $22 level and stay above the trend line. If successful, the bulls can again tackle resistance at $22.78 before the major obstacle of the 200-day Exponential Moving Average (EMA) (blue).
Solana had already fallen below the “bull line” on April 8, 2022, technically placing it in bear territory. The collapse of FTX and the entanglements it caused are probable reasons why SOL is still undervalued compared to other altcoins. Although many other altcoins are already trading above the 200-day EMA, this indicator remains the most significant target for Solana. However, the bull market’s renewed upswing may be necessary to achieve this, mainly involving the leading cryptocurrency, Bitcoin.
Once the 200-day EMA falls, Solana’s yearly high at $27.13 comes into focus, with the 38.2% Fibonacci level located there. Subsequent Fibonacci levels would be $33.06 (50% Fibonacci), $39.14 (61.8%Fibonacci), and $47.81 (78.6% Fibonacci).
Remarkably, Solana’s current strength can also be seen in the SOL/BTC chart (1-day chart). SOL is on the verge of breaking out of a descending parallel channel that has defined Solana’s trend since mid-January.
Adding to the bullish outlook for Solana, Mastercard announced a partnership with a handful of layer 1 projects to create common standards, including Solana. Other blockchains like Ethereum, Aptos, Polygon, and Avalanche also made the cut. The Solana Foundation commented on this development via Twitter, citing their excitement in working with Mastercard on tools to verify trusted interactions and help secure interactions between web2 and web3 apps. This is seen as a positive step forward in enabling trust in trustless environments for consumers, businesses, and the greater good.
In conclusion, Solana has retained its bullish outlook despite the recent correction in the crypto market. The ascending trend line on the 1-day chart, the current strength, and the upcoming partnership with Mastercard all bode well for the future price action of SOL. However, achieving the 200-day EMA remains the most crucial target, and the market’s overall direction must maintain its bullish trend.
