At Solana’s [SOL] the fall of the wedge revived its short-term bearish inclinations. Thus, the alt fell below the 20 EMA (red) and the 50 EMA (cyan) while forming a bearish pattern within the 4-hour time frame.
Alongside Fibonacci 61.8 support, two-month trendline support (white, dotted) has cushioned recent retracements.
Any break below the current pattern may open the door to a short-term decline before any realistic chance of recovery. At press time, SOL was trading at $32.8575.
SOL 4-Hour Chart
SOL’s reversal from the $42 mark pulled the alt below its short-term EMAs. The bearish south-facing crossover of the 20/50 EMA further weakened the buying rallies.
Over the past couple of months, trendline support (white, dotted) has taken an important area of value. Since the bulls flipped this line to immediate support after breaking it on the previous rally from the rising wedge.
SOL’s recent moves have drawn a bearish pennant on the chart. The price action appeared to consolidate while the 20 EMA posed strong resistance.
A potential close below the setup could help sellers test the $31-$32 range in the coming sessions. A close below this level could hint at further decline to retest the two-month trendline support.
However, the 61.8% support could help bulls avoid further declines. A convincing close above the 61.8% level could extend the compression phase near the 20 EMA before a volatile move. Any bearish invalidation could see a bearish counter in the $34-$35 range.
The Relative Strength Index (RSI) has failed to find a place above the 45 point resistance over the past few days. Given its sideways tendencies, buyers still have a long way to go to shift the broader outlook in their favor.
Interestingly, the Accumulation/Distribution line has recorded lower lows over the past three days. Thus, a bounce from its immediate trendline support could affirm a bullish divergence with the price. This could help bulls hold the 61.8% level on the chart.
Also, traders should pay attention to AOs that close above the zero line to determine a change in market momentum before placing calls.
Given the bearish pattern near its south-facing EMAs, SOL might continue its devaluation in the coming sessions. The triggers and take profit levels would remain the same as above.
A potential accumulation on the A/D indicator and the 61.8% support could hamper short-term selling efforts. Above all, investors/traders should keep a close eye on Bitcoin [BTC] movement to determine its effects on general sentiment.