The cryptocurrency market has been abuzz with the latest developments in Solana (SOL) as it enters a new correction phase while testing the 50-day Exponential Moving Average (EMA). Despite a recent drop in price, there are indications that Solana might be gearing up for a bullish breakout.
A flag pattern formation has emerged, suggesting a temporary correction in the SOL price. However, the overall market sentiment remains bullish, as indicated by a positive alignment in daily EMAs (20, 50, 100, and 200). Although the 24-hour trading volume on the Solana coin has shown a 2% loss, active buyers are absorbing the supply quickly at levels under $90, leading to lower price rejection candles, thereby increasing the possibility of a bullish reversal with a double-bottom pattern formation or a bullish reversal within the flag pattern.
Additionally, the correction phase has seen a retest of the 38.20% Fibonacci level for the second time, and the drop in trading volume accompanying the price fall has resulted in a lack of selling pressure, increasing the chances of buyers regaining control of the trend. This sets the stage for a potential bounce back in the SOL price, potentially challenging the overhead resistance trendline.
As SOL undergoes the short-term correction, the falling channel projects a weakness amidst the prevailing price trend. However, ongoing buying at lower levels may soon catalyze a bullish comeback. If the SOL price breaks above the $100 mark, it may face crucial resistances at the $120 and $150 marks. Conversely, a quick correction below the 38.20% Fibonacci level could result in a downfall to the $72 mark.
Key indicators to watch include the daily Relative Strength Index (RSI) slope, which resists a drop below the 50% line, reflecting bullish fightback, and the 50-day EMA, which provides dynamic support to the recent drop and coincides with the 38.20% Fib level to strengthen the base.
In summary, the correction phase and the potential for a bullish rebound indicate an interesting time for Solana. Keep an eye on key support and resistance levels, as well as the behavior of key indicators, to stay informed about the potential price movements of SOL in the coming days.