Category: Forex News

Is There Problem? Solana (SOL) on Verge of Reversal

By Published On: March 5, 20243.7 min readViews: 2610 Comments on Is There Problem? Solana (SOL) on Verge of Reversal
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The Cardano market has recently showcased a trend that could be cause for concern among its investors. A noticeable decrease in trading volume suggests that the momentum behind ADA’s recent price rally may be waning, potentially signaling an upcoming period of volatility and price correction.

The declining volume trend is a critical red flag in technical analysis, often indicating a lack of conviction in the asset’s ability to sustain its current price levels. As trading activity diminishes, the support that has propelled ADA’s price higher becomes increasingly fragile. This situation can lead to a scenario where even a minor sell-off could trigger a disproportionate price drop, as fewer buyers might be present to absorb the sell orders.

ADAUSDT
Cardano/USDT Chart by TradingView

A closer look at the ADA price chart reveals that while the currency has been experiencing an upward trajectory, the diminishing volume could signify that this rally might not have a strong foundation. The recent surge in ADA’s price could be at risk if the market does not regain its trading volume to reinforce the uptrend.

Cardano’s price is testing a critical resistance level. If the trading volume continues to fall, there is a possibility that ADA will lose support and enter a severe correction. The support levels that were previously reliable may not hold if they are tested again with a low volume, leading to potential massive losses for those holding the asset.

Ethereum to face issues?

Ethereum has been riding a wave of bullish momentum, but as the old adage goes, what goes up must come down — or at least take a breather. The second-largest cryptocurrency by market capitalization has seen a sharp rally in its price, but with such steep ascents come concerns about sustainability and the potential for a reversal.

The current state of Ethereum’s rally is one of caution. The momentum indicators, while still in bullish territories, are beginning to show signs that the rally may be overextended. The RSI, a momentum oscillator that measures the speed and change of price movements, is nearing levels that typically indicate overbought conditions, which could precede a price correction.

For Ethereum, support levels are now established at $2,993, $2,653 and $2,515, which would be crucial to watch if a downturn begins. A healthy correction would potentially see Ethereum’s price retesting these levels, confirming their strength and providing a possible accumulation point for investors.

Solana holds tight

As Solana encounters a minor price correction at the $128 threshold, there are indicators suggesting that this could be the precursor to a more extended reversal. This notion is based on a detailed examination of its recent price action, which reveals that SOL’s impressive climb could be tapering off.

The support and resistance levels for SOL have become increasingly relevant in recent trading sessions. After hitting resistance around $128, SOL experienced a pullback, which has left investors and analysts speculating about the possibility of a trend reversal. The support levels at $112 and $103, previously serving as solid grounds during SOL’s ascent, are now being scrutinized as potential retest points in the event of a further price decline.

Analyzing the current trend through technical indicators shows a reduction in trading volume accompanying the price dip. This decreased volume could signal a weakening buying pressure, which, when coupled with the resistance met at $128, heightens the probability of a trend reversal. If the volume continues to decline and the price fails to break past the resistance level with conviction, SOL could indeed be on the cusp of a reversal.

Looking forward, if the market sentiment shifts and the price of SOL breaks below the $112 support, this could confirm the bearish scenario, potentially leading to a prolonged retracement. Such a correction would not be out of the ordinary, as it would allow the market to consolidate after the recent rally and could potentially provide healthier long-term growth for SOL.


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