With Solana (SOL) breaking out of the multi-week pattern, some market observers are suggesting that a retest of a key resistance level could be on the horizon. Nevertheless, they also warned that the next rise could be short-lived if the momentum does not hold.
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Solana Breakout focuses on important resistance
On Wednesday, Solana rose 4.2% from the daily time frame, retesting the $90 area for the first time in almost a month before rebounding. The cryptocurrency has been in the $75 to $96 price range since the market crash in early February, failing to regain the upper zone of this range during this period.
Amid today’s rise, analyst Ali Martinez highlighted that Solana was breaking out of an eight-week symmetrical triangle formation, which could lead to a rally towards the upper end of the local range.
As he explained, a spike in buying pressure could push SOL’s price towards $92, a key horizontal resistance of the past three months in the daily and weekly time frames. If this level is regained, the cryptocurrency’s breakout could extend to $96, a level that has not been retested since the mid-March market rally.
In addition, CryptoRand noted that Solana has also broken out of the eight-month downtrend following the recent price rise, suggesting a bullish reversal could be on the horizon if this level holds.
However, market observer Daan Crypto Trades be shows that the altcoin has been consolidating within a 10% range for three months, recording the lowest volatility in years.
As a result, the analyst confirmed that sooner or later a big move would happen, but the direction “will depend entirely on which side breaks first. It will not be a move to fade (…). Probably, after breaking this compression, a stage of at least 20-30% will occur.”
SOL will rally for the next dump?
In an X post, Altcoin Sherpa noted that Solana has performed worse than all other majors in recent months. Unlike Bitcoin (BTC) and Ethereum (ETH), SOL has failed to retest or break the three-month range despite the recent market recovery.
The analyst confirmed that the altcoin needs bullish conditions and the price of BTC needs to stabilize in order to continue rising. Meanwhile, more crypto online underlined the importance of the overall context of SOL in a video analysis.
He explained that “on the higher timeframe there is no sign that we have reached a meaningful low,” and that “the upside reaction from the February low was simply too weak. And even more importantly, the structure is not currently supporting a long-term rally.”
The analyst pointed out that there is “a lot of resistance,” but noted that a countertrend rally to the $110-$140 area is “a very reasonable expectation” to form a top as long as the February lows persist.
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Nevertheless, he believes that “from there there is a good opportunity to move lower, possibly in a fifth wave down to complete a larger correction in a so-called wave four, or as with Bitcoin, the expectation is a more meaningful correction towards the mid-$30s.”
“So maybe the market needs to move up a little bit to complete this correction. Get the crowd to turn bullish again so the new sellers can come in,” he concluded.
Featured image from Unsplash.com, chart from TradingView.com