The Solana (SOL) price has broken down from long- and short-term support levels. There are no bullish reversal signs in place.
SOL is the native token of the Solana blockchain project. It uses the proof-of-stake (PoS) consensus mechanism. The Solana protocol mainly deals with smart contracts.
The Solana ecosystem was hit especially hard by the FTX fallout since it was heavily intertwined with both FTX and Sam Bankman-Fried. The decentralized finance (DeFi) sector was hit especially hard. Currently, there is only $255 million total-value-locked (TVL), a decrease of more than 90% from the $10 billion all-time high TVL.
However, there is still some positive Solana news. Solana’s founder Anatoly Yakovenko stated that they still have 30 months of runway left, which bodes well for the possibility of recovery. Additionally, it is worth mentioning that Solana has a very strong developer community.
Solana Price Goes Into Free Fall
The Solana price has fallen since Nov. 2021, when it reached an all-time high of $259.90. Initially, the SOL price bounced at the $29 horizontal support area. However, it broke down in Nov. 2022 and reached a new yearly low of $10.94. The breakdown was especially noteworthy since the $29 support area had previously acted as support since July 2021.
There are no bullish reversal signs in place whatsoever. This can be seen in the weekly RSI, which is decreasing (red icon) and has not generated any bullish divergence. Furthermore, the indicator has yet to fall in oversold territory. This supports the possibility of a continued decrease.
If the downward movement continues, the next support area for the SOL token would be at $4, a level not reached since Jan. 2021. Measuring from the current price, it would amount to a drop of 67%.
While this is the most likely Solana price forecast, reclaiming the $29 horizontal area would invalidate the bearish projection. Since the area has yet to even be tested, this seems unlikely.
Price Loses Short-Term Support
The daily chart reiterates the findings from the weekly one. The breakdown from the $13.50 horizontal support area immediately comes into the spotlight. The area previously initiated two bounces (green icons), on Nov. 28 and Dec. 13.
The Solana price broke down from the line amid a large bearish candlestick on Dec. 16. It bounced slightly over the next 24 hours but failed to initiate an upward movement.
It is interesting to note that the daily RSI has generated bullish divergence (green line). This is the only bullish sign amidst heavily bearish price action. As a result, the breakdown of this bullish divergence trendline could accelerate the downward movement.
To conclude, the majority of signs suggest that the long- and short-term Solana price trends are bearish. So, the continuation of the downward movement is the most likely forecast.
Reclaiming the $13.50 area would make the short-term trend bullish while reclaiming the $29 level would make the long-term trend bullish.
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