SOL is at a crossroads between breaking up or breaking down

TLDR

• SOL is forming a pennant pattern, indicating a potential breakout aligning with Bitcoin's next move
• However, technicals place it in a precarious position, with the RSI normalising on shorter timeframes but remaining overbought on longer ones.
• The market dynamics suggest a strong current long bias that could be ripe for a shakeout.
• We recommend caution with SOL's current state. Consider Dollar-Cost Averaging on dips below $37, and buying aggressively below $32.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Technical analysis

Looking at SOL in the 12-hour timeframe, we see it forming another pennant pattern. This will likely break out along with the BTC breakout. Now, whether that be up or down will likely depend on which side of the orderbook is squeezed. The major support for price will be the $37 to $38 levels, with the $32 to $33 area being the major support beneath it. 

We like these lower levels, particularly the $32 to $33 area for long-term accumulation of SOL for the next bull run. 

SOL 12hr

Market mechanics

The RSI on the 12hr is now back into more normal territory, but the daily and especially the 3D timeframes remain very overbought. A resetting of these should see a more meaningful pullback for price. 

When looking at the mechanics, the funding rate for SOL is very positive, while the open interest remains high. This suggests there is a bias to be long, and therefore, there may be a flush out of these longs. If BTC breaks down, we could see a more volatile flush out for SOL, potentially reaching the $37 to $38 areas. 

Cryptonary’s take

We remain cautious about SOL at the current price levels. Our caution is based on how the leverage is built up and how the market is positioned. Also, seeing that BTC is looking very heavy in terms of being over-leveraged, caution is the logical path. 

If we do see a flush out of the leverage, we feel it’ll likely be long liquidations and therefore price will have declined. If price moves below $37, we suggest this can be a good area to begin lightly DCA’ing for the long run, with more aggressive DCA’ing coming if we see SOL below $32.