Spotlight on SOL: Is the recent rally sustainable?

TLDR

• SOL has been a standout performer, maintaining around the $32 mark, with $30.38 as crucial local support.
• Technical analysis suggests potential exhaustion in SOL's bullish trend, with higher highs showing diminishing returns.
• RSI indicators indicate a potential need for a deeper pullback, with multiple bearish divergences detected.
• Despite being relatively overheated, we think SOL is undervalued for the long term and plan to DCA in at sub $30 prices.

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

SOL has performed fantastically as one of the standout performers, having maintained around the $32 area. The $30.38 has continued to act as local support, and price maintaining this level will be key to help fuel SOL for further upside. 

In terms of technical formations, there still isn’t much, and price is just putting in higher highs that are somewhat diminishing in their returns. Almost exhaustive new highs. 

SOL 12hr

RSI and funding rates

“We feel the RSI is key here. We’ve seen 3 higher highs in price, with 3 lower highs on the RSI, all in overbought territory, with the latest lower high being underneath the RSI-based MA - below the moving average trend. This would suggest to us that SOL needs a deeper pullback to reset some of these indicators”. 

The above was yesterday’s update, and since then, SOL has put in another higher high in price and another lower high on the oscillator. This is now 3 bearish divergences on the bounce on the 12-hour timeframe. This suggests to us to exercise caution here as SOL looks very exhausted. 

In terms of funding rates, SOL remains very positive. However, open interest is still relatively low despite increasing in the past weeks. Overall, this is a relatively healthy picture here for SOL’s mechanics behind the scenes. 

Cryptonary’s take

SOL is one we will look to increase our spot bags off in the coming weeks and months. Any material weakening between now and the BTC halving in April should be used to DCA into SOL for the long term. 

Our long-term price targets are at least a retest of its prior all-time highs. 

Action

• For now, SOL could go higher if BTC can push higher also, but it looks relatively overheated here and looks somewhat exhausted to the upside.
• We believe SOL is still undervalued compared to what it could be in the next bull market, and therefore, we will be DCA’ing into SOL sub $30.