2023-12-6 21:00 |
An analyst has explained how Solana may be at risk of a correction based on the data of two SOL technical indicators.
Solana Has Recently Observed The Formation Of Two Bearish SignalsIn a new post on X, analyst Ali has discussed why SOL could be at risk of seeing a retracement shortly. The analyst has referred to two technical indicators for the coin: the TD Sequential and RSI.
The first of these, the Tom Demark (TD) Sequential, is a metric generally used for spotting probable reversal points in any asset’s price. The indicator has two phases, the first of which is a nine-candles-long “setup” phase.
When nine candles of the same polarity are in following a reversal in the price, the TD Sequential setup is said to be complete, and the asset could be assumed to have reached a likely point of a trend shift.
Naturally, if the candles are green, the setup’s completion would point towards a top, while red candles would imply a bottom formation. Once the setup is over, a thirteen-candles-long countdown phase starts. At the end of these thirteen candles, another probable change of direction happens for the chart.
According to Ali, a setup phase has recently formed for Solana. Below is the chart shared by the analyst that shows this TD Sequential pattern in the weekly price of the cryptocurrency.
The graph shows that the TD Sequential setup has recently been completed with green candles, implying that the price may have already reversed toward a bearish trend.
In the same chart, Ali has also attached the data for the second relevant indicator: the Relative Strength Index (RSI). The RSI is a momentum oscillator that keeps track of the speed and magnitude of the recent changes in an asset’s price.
This indicator determines whether the asset is undervalued or overvalued at the moment. When the metric has a value greater than 70, it can be a sign that the asset is overbought, while it being under the 30 mark suggests an oversold condition.
As is apparent from the graph, the Solana RSI recently broke above the 70 mark and has remained inside the territory, suggesting that SOL has been overvalued recently.
This would mean that two bearish signals are looming over the cryptocurrency’s head right now. “A spike in profit-taking could trigger a retracement to $47.6,” says the analyst. From the current price, such a potential correction to $47.6 would mean a drawdown of over 20%.
Solana’s fate may yet be averted; however, as the analyst explains, “SOL would have to print a weekly candlestick close above $68.4 to invalidate the bearish outlook and aim for $108.”
SOL PriceSolana had rallied above the $65 mark yesterday, but the asset has already seen a pullback as it’s now trading around $60.
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