Following a record peak of $264, Solana (SOL) experienced a decline of over 20% in just three weeks, signaling a cooling-off period for the digital asset.
In December, SOL made efforts to reverse its downward trajectory, showing a 14% increase as it tested support levels similar to those seen in March. However, the question remains: can SOL break free from the current downtrend and continue its recovery?
Examining Solana’s Price Performance and Potential Trend Reversal
During November, SOL’s price stabilized around the March high of $210 before reaching an all-time high of $264. The significance of retesting this level as a form of support cannot be overlooked for future price movements.
Despite attempts at recovery, recent price upswings were met with resistance at the upper boundaries of the downtrend. Currently, these upper limits are hovering around $235.
If there is a clear breakthrough above the $235 mark, it could signal an end to the short-term downtrend and pave the way for a bullish climb towards targets such as $248 or even $264.
It is worth noting, however, that the Relative Strength Index (RSI) has not shown a definitive surge above the neutral threshold in December, indicating a subdued demand that might hinder SOL’s strong breakout prospects.
Should another price rejection occur at the range high, SOL could retreat back to mid-range levels or the March highs.
A Target of $245 Emerges
Analysis from Conglass’s liquidation heatmap revealed a key upside liquidity zone in the $244-$245 range (bright yellow level), suggesting that a breakout from the downtrend might propel SOL towards $245.
Additionally, daily charts indicated another liquidity zone above $220, situated around the mid-range of the channel.
Collectively, the data from the liquidation heatmap implies that if SOL falters at the range high before attempting another breakout, it could experience a decline towards $220.
Despite the anticipated short-term price fluctuations for SOL, asset management firm Bitwise remains optimistic about its long-term prospects, projecting a price target of $750 by the year 2025.
Disclaimer: The views expressed in this analysis are opinions and should not be construed as professional financial advice or recommendations for trading or investment decisions.