Market Direction

Solana is facing technical resistance after a parabolic surge

Updated: Aug 23, 2024

Published: Oct 25, 2023

SOL has bounced off the horizontal level of $30.38 and is now pushing to put a higher high on the daily candle. Solana seems to be running out of steam after its parabolic surge.

Here's why we expect a further pullback in the coming weeks.

TLDR

SOL bounced nicely off $30.38 support.
RSI divergences are forming on higher timeframes.
BitMEX funding is very positive, indicating bias for longs.
Expect pullback after the overheated parabolic move.

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

Following SOL’s massive move higher, it was able to get above the $30.38 horizontal resistance. Now, it looks to have initially turned this level into new support, having seen price bounce from this level yesterday. Price has essentially gone straight up, and for now, we need more days’ worth of price action to see what sort of technical pattern forms.

SOL price today

RSI and funding rates

The RSI is interesting here. We see on the 12-hour and the daily timeframes that if SOL does close a higher high today, this will create a bearish divergence in overbought territory. This could potentially drive a sell-off.

In terms of funding rates, it’s very positive. On Bitmex, the funding rate is 0.0215%, which is big. This is Bitmex attempting to bring the futures price back in line with the spot price, as it now trades well beneath the spot price. Hence, a very positive funding rate is offered to entice longs in that should then bring the futures price back in line with the spot price. Essentially, traders on Bitmex are heavily biased toward being long, and they are paying a premium.

Cryptonary’s take

SOL is overheated here. If we can put in a higher high in price today, this would be the formation of bearish divergences on the 12-hour and the daily timeframes. This would indicate that a price pullback is likely.

Action

Not looking to take any action here. We would wait on today’s close to see if a higher high in price comes and if this puts in the bearish divergences.
We feel SOL is overheated here. Therefore, we would expect a further pullback in the coming weeks unless more positive ETF news comes out. This would probably help push the market higher.