Solana almost at $45: A breakout or fakeout?

TLDR

• Solana heads toward $45 but faces signs of overheating, like high funding rates.
• Very overbought on the daily/weekly timeframes; correction overdue.
• Upside is still possible near-term to $48 area before a larger pullback.
• Long-term bullish, but exercise caution trading here; reduce leverage.

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

When we covered SOL yesterday, we suggested that it’s forming a pennant, similar to how it did a week or so ago and had a major breakout to the upside. SOL is now trying to get a further breakout, although it was initially rejected at the $45 area. The critical range for SOL is the $37 to $48 range. However, we do feel that the local top will be around the $48 area if SOL does move higher. 

When we look at SOL on the 1D and 3D timeframe, it’s extremely overbought, and we would expect a pullback at some point in the coming weeks/months, even if that means SOL can continue higher in the very short-term - topping area around $48. 

SOL 12hr

Market mechanics

The funding rate for SOL is positive but not frothy and overheated. The open interest is increasing and is at monthly highs. This is beginning to move into overheated territory, and therefore, we would exercise caution here. We do see a flush-out occurring in the coming weeks. With everyone bullish, it’s likely the flush-out is to the downside. 

Cryptonary’s take

We still love SOL for a long-term play. However, we think it’s getting somewhat overheated here, even though we think it’s possible that SOL can move higher into the $45 to $48 area in the very short term. 

We’re not looking to actively trade SOL here, although we’ll be DCA’ing into any dips below $38 and aggressively DCA’ing into anything sub $33.

SOL can chop around in the range in quite a volatile manner. So, we would exercise caution here, and if you are going to trade, reduce leverage and leave yourself wide room to allow for price fluctuations. Otherwise, you can be easily shaken out and lose money.