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Solana (SOL) Price Slides After DeFi Project Shuts Down

2 mins
Updated by Geraint Price
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In Brief

  • Solana (SOL) created a bearish engulfing candlestick.
  • It broke down from an ascending support line.
  • The daily RSI generated bearish divergence.
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The Solana (SOL) price has broken down from a long-term structure, fueling the possibility that it will begin a correction.

There was an absence of major Solana news last week. However, some minor events are worth mentioning. The winter school of Solana, a nine-week course for developers supported by the Solana Foundation will close its application process on Feb. 3. So far, there have been more than 200 applications.

Next, Friktion, a DeFi project on the Solana blockchain, announced that it is permanently shutting down since it is no longer cost-effective.

Solana Fails to Clear Resistance

Since Aug. 13, the Solana price has fallen below a declining resistance line. The line led to a rejection at the start of Nov., which resulted in a minimum price of $8 on Dec. 29. After that, the price started a significant upward trend that has since seen a gain of 227%.

However, the price of Solana stayed below the line despite the increase. Additionally, price displays a lack of strength by creating bearish divergence (green line) in the daily RSI and a bearish engulfing candlestick (white icon) over the past 24 hours. Both of these are bearish signs that indicate a downward movement is likely. 

A daily close above the descending resistance line would negate this bearish Solana forecast. In that case, an increase toward the next resistance at $38 would be expected.

Solana (SOL) Daily Resistance
SOL/USDT Daily Chart. Source: TradingView

Solana Price Prediction for Feb: Breakdown Will Lead to Correction

A look at the technical analysis for the six-hour time frame shows that the SOL price just broke down from an ascending support line in place since the beginning of the year. Breakdowns from such long-term structures often lead to downward movements.

Therefore, it is possible that the Solana price may fall to the 0.382 or 0.5 Fib retracement support levels at $19.50 and $17.31, respectively.

On the other hand, reclaiming the line would invalidate this bearish outlook. Since reclaiming the support line would also mean that the SOL price would break out from the previously outlined resistance line, the readings from the six-hour time frame align with those from the daily one. Both give a bearish Solana price prediction for Feb.

Solana (SOL) Price Prediction for Feb
SOL/USDT Six-Hour Chart. Source: TradingView

To conclude, the Solana price prediction for Feb. is bearish. There are several reasons for this, such as the creation of a bearish candlestick, bearish divergence in the RSI, and breakdown from an ascending support line. A daily close above $27 would invalidate this bearish outlook and send the SOL price to $38.

For BeInCrypto’s latest crypto market analysis, click here.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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