Hello and welcome to another updated article about Solana (SOL). We've recently observed a promising turnaround from the target area, prompting some significant changes in our chart analysis. If you've been following our previous updates, you were likely anticipating this reaction.
Key Developments
Initial Resistance Break
The first signal for this potential reversal was a break of the initial resistance, which has now been surpassed significantly. Consequently, this resistance level has been removed from the chart as it is no longer relevant.
Trend Line Break
Another critical signal was the break of the initial trend line. Solana has also moved well above this trend line, reinforcing the bullish outlook.
Elliott Wave Triangle Analysis
We are still tracking this movement as an Elliott wave triangle, although there is a possibility that it could be a larger Wave 4 pullback in an ABC structure, not a triangle. The distinction lies in that a triangle would see another 'D' wave, forming a lower high and a higher low. Conversely, an ABC structure would continue downward from here. However, given the recent price action, we are now favoring the scenario where the low has been reached.
Micro Structure Analysis
Zooming into the one-hour chart, the decline has followed our expectations. We had previously identified the $119 level as a critical point of interest, and the price approached this level before reversing. The initial signal for the move down was the break of a trend line, and the price then entered the target region as anticipated.
Current Support and Resistance Levels
- Support Area: A new micro support area has been defined between $125.31 and $131.61. This area will be adjusted as necessary throughout the day.
- Next Resistance: The next trend line, which could act as resistance, along with swing highs around $141 to $142, are the key levels to watch for potential resistance.
Potential Scenarios
- Bullish Scenario: As long as the price holds above the micro support area, we can expect higher prices. The recent 14% rise from the low indicates a potential five-wave pattern to the upside, although the exact count is still under observation.
- Bearish Scenario: A break below $125.31 would indicate that we might be heading down in a larger corrective wave (Wave C). This would invalidate the current bullish outlook and suggest further downside potential.
Conclusion
Solana has shown a significant reaction from the support area, suggesting a potential bottom. However, it's crucial to monitor the micro support area and the next resistance levels for further confirmation.