Key Takeaways
Solana broke bullishly out of a rising wedge, but a momentum and price divergence suggested a pullback to $217 and $210 was likely in the coming days.
Solana [SOL] has broken out of its rising wedge pattern. Generally considered a bearish pattern, it can sometimes have a bullish breakout as well.
In an earlier report, AMBCrypto highlighted the potential for a 10% price pullback.
This was based on the idea that the outperforming Solana could be part of a temporary capital rotation from Bitcoin [BTC] and Ethereum [ETH].
The rising SOL Futures Open Interest hinted at momentum chasers and speculative traders, but the move past $220 was a sign of bullish strength.
Bullish outlook with a minor dip ahead for Solana
Source: SOL/USDT on TradingView
On the 1-day chart, the market structure of Solana was bullish. A set of Fibonacci retracement levels was plotted based on the rally to $206 in June and July.
The retracement after this rally reached $156, the 61.8% retracement level.
Hence, the selected Fibonacci levels were viable for retracement and extension targets. At the time of writing, SOL was testing the $225 level, which was the 23.6% extension level.
Further higher, the $256 and $286 levels were the next price targets.
The OBV has been trending higher consistently since June, reflecting increased buying pressure. Meanwhile, the RSI was only at 56.
This showed that the market was nowhere near overextended levels, based on the momentum indicator.
Source: SOL/USDT on TradingView
On the other hand, the 4-hour timeframe showed a clear bearish divergence.
The RSI has been making lower highs since the 8th of September, while the price pushed higher. This suggested that a Solana pullback was likely.
Source: Coinglass
The 1-week liquidation heatmap showed that the $230 and $217 were short-term price targets.
It appeared like SOL was headed higher despite the bearish divergence. In case of a pullback, the $217 and $210 support levels would be the ones to watch.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
