The SOL token, which powers the Solana smart contracts ecosystem, is currently trading at $20.10, 60% above the lowest price point in 2022, and 30% above the lows experienced in March 2023, indicating a significant upward trend.
Solana Price Shows Resilience, Hinting at an Impending Rally
The Solana price plunged by approximately 95% in 2022 due to the longstanding crypto winter and a tainted association of the ecosystem with the collapsed FTX exchange, its founder Sam Bankman-Fried, and Alameda Research, which was among the leading crypto market makers.
However, Solana has shown exemplary strength and performance in 2023 where it has traded highs around $27.00, although the token pulled back in March, testing support at $16.00 before reversing the trend to trade slightly above $20.00 at the time of writing.
Experts believe Solana’s performance dates back to December when the token became significantly oversold, prompting investors to buy the dip. On-chain and fundamental data from Messari revealed the Solana ecosystem generally remained stable during FTX’s messy collapse, including its staking and decentralized finance (DeFi) positions.
“Solana will continue to release a multitude of initiatives, including network upgrades, ecosystem developments, and community efforts, to name a few,” James Stautman, a researcher at Messari said in the report about Solana’s performance.
Stautman’s statement implied that the market may have overreacted to the implosion of FTX, leading to a sharp rebound in Solana price bolstered by a generally up-trending crypto market in 2023.
“After a tumultuous year fraught with one challenge after another, light appears to be at the end of the tunnel heading into 2023,” Stautman added.
Meanwhile, the Solana price is preparing for another substantial breakout based on its technical outlook, as seen on the four-hour timeframe chart. Support at $20.00 appears strong enough to keep the uptrend intact, especially now that SOL is battling resistance at the 50-day Exponential Moving Average (EMA) (the line in red) holding the ground at $20.72.
Although a break above the 50-day EMA is essential, bulls need to brace themselves for a stronger challenge at $21.00. This is a confluence resistance area brought about by the 200-day EMA (line in purple) and the descending trendline, as highlighted on the chart.
A bullish outcome is highly likely, considering a buy signal from the Moving Average Convergence Divergence (MACD) indicator. Investors and traders are likely to consider increasing their positions in SOL as long as the MACD line in blue holds above the signal line in red.
However, to do so, Solana needs to see inflow volume rise to surpass outflow volume. For now, consolidation could take precedence, as observed with the On-Balance-Volume (OBV) indicator, which currently indicates a negative volume flow of -28.73M.
Failure to break and hold above SOL’s immediate resistance at the 50-day EMA and the confluence seller congestion at $21.00 may delay the breakout eyeing $24.00 in the short term.
Support would be expected to come in handy at $20.00 but if push comes to shove and overhead pressure overwhelms the bulls, Solana price may resolve to seek support at $16.00.
Evaluating Solana Price Short-Term Profitability
Traders who may want to seek or increase exposure to Solana price on Tuesday should keep in mind some of these parameters. For instance, SOL currently trades above its weekly open at $20.54 while the previous day’s open at $20.02 holds as a solid support area.
Solana price may become a contender for the monthly open at $21.21 if liquidity from support at $20.00 is strong enough to pierce through resistance brought about by the 50-day EMA, 100-day EMA, and 200-day EMA.
As established earlier, a sustained break below the previous day’s open at $20.02 could see Solana price drop to retest the primary support at $16.00. However, investors should not ignore short-term support areas at $19.00 and $18.00, respectively.
For investors seeking medium to long-term exposure to SOL, it would be advisable to wait until the SuperTrend indicator (thick line overlaying the chart) flips below the price with its color changing to green from red before activating their positions.
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