Solana price signals a possible 40% crash by New Year’s

Solana’s SOL token, currently valued at $72, faces the risk of a potential 40% decline in the coming weeks, according to a classic technical setup. Despite a recent surge to around $76.35, marking a 50% increase from its local low of approximately $51 a month ago, SOL’s rally lacks the necessary momentum for a sustained uptrend.

Solana price signals a possible 40% crash by New Year’s

An important indicator, the relative strength index (RSI) on SOL’s three-day chart, has dropped from 90 to approximately 73, forming lower highs compared to the price’s higher highs. A bearish divergence is evident between SOL’s rising price and declining three-day trading volumes, signaling a potential weakening of the current bullish trend and a hint at an impending trend reversal.

In recent days, SOL’s price has stabilized around $73, aligning with its 0.236 Fibonacci retracement line, previously acting as support in Q1 2022. The bearish projection anticipates a 40% drop towards its 50-3D exponential moving average (EMA), represented by the red wave, near $42 by January 2024, assuming a correction materializes following SOL’s bearish divergence signals.

Is SOL Price Bull Market in Jeopardy?

Solana’s bearish divergence is seen as a potential buying opportunity, as suggested by independent analyst Cold Blooded Shiller. According to him, these indicators point towards a higher likelihood of more affordable prices for buying, rather than signaling a broader cryptocurrency market top.

He emphasized, “The trends are still up, and we remain inclined to buy. The focus is not as much on the short side, and there are indications that we might be fortunate to acquire some cheaper coins across the market.”