Benzinga - Solana (CRYPTO: SOL) was surging up about 16% at one point on Tuesday afternoon to reach over the $13 mark, as the crypto continued to rebound from its Dec. 29 low of $8.
The spike higher contrasted with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which were struggling to trade flat amid the bearish action of the S&P 500.
On Dec. 29, the crypto fell under the $10 mark for the first time in almost two years, but the most recent downtrend began on Nov. 6, when information first emerged indicating Sam Bankman-Fried's FTX platform was in trouble.
Between that day and Nov. 9, Solana plunged over 67% before beginning to consolidate sideways above a support level at $11.26. When the crypto fell under that area on Dec. 27, technical traders may have predicted another drop was in the cards.
Bankman-Fried had shown support for Solana, which may have spooked traders and investors, especially because Solana has seen “fraudulent developer activity” in the past, according to a report. Solana also suffered several outages in 2022, which caused some investors to shy away from the crypto.
In December, Solana saw "DeGods" and "Y00ts," two of the top non-fungible token (NFT) projects on the platform, announcing that they will be leaving the SOL ecosystem.
Although Solana’s recent rebound will be a relief for investors who hold the crypto at higher prices, SOL has a lot of work to do in order to prove the price action is more than a short-term bounce.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The Solana Chart: After Solana reached the $8 low on Dec. 29, the crypto bounced up to print a doji candlestick, which indicated a bounce was in the cards. Because short-term bounces take place within downtrends, however, there’s currently no indication that the longer-term bottom is in.
- For Solana to negate its current downtrend, the crypto will either have to shoot up above $15 or retrace to print a higher low above $8. Unless either happens over the next several days, the most likely scenario is that Solana will continue to trend lower over the next few weeks.
- During Tuesday’s 24-hour trading session, Solana was attempting to break up above the 50-day simple moving average (SMA) but was struggling to regain the area as support. If Solana closes the trading days under the 50-day SMA, the crypto will print a bearish shooting star candlestick, which could indicate lower prices will come on Wednesday.
- Bullish traders who aren’t already in a position may choose to wait and see if Solana eventually falls lower and prints a bullish reversal candlestick above $8 to take a position.
- Solana has resistance above at $14.96 and $19.16 and support below at $11.26 and $8.
Read Next: 10 Items On Solana's To-Do List for 2023
Photo: courtesy of Shutterstock.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.