Key takeaways:
Solana’s Supertrend indicator sent a “buy” signal that has led to a 1,300% price rally in the past.
Resistance at $250 and overbought conditions show a risk of SOL retesting $220.
Solana’s (SOL) SuperTrend indicator sent a “buy” signal on its weekly chart, an occurrence that has historically preceded parabolic rallies.
Previous signals led to 620%-3,200% SOL price gains
Solana’s weekly chart showed that the SuperTrend indicator flashed a bullish signal when it reversed from red to green and moved below the price last week.
This indicator overlays the chart while tracking SOL’s price trend, like the moving averages. It incorporates the average true range in its calculations, which helps traders identify market trends.
Related: Bitcoin and Solana ETPs lead $3.3B crypto inflow rebound: CoinShares
Previous confirmations from the indicator during the 2021 bull market were followed by 3,200% and 620% rallies, as shown in the chart below.
The last time the SuperTrend sent the “buy” signal was in July 2023, preceding a 1,339% rally to all-time highs above $295 reached on Jan. 19, from just above $20.
“Supertrend will flip green/buy if $SOL can close a weekly candle above $220.45,” said analyst Dorkchicken in an X post last week, adding:
“Last time was in 2023, and the price went from $39 to $294.”
The SuperTrend indicator reversed from red to green and flipped below the price as SOL crossed $220 on Wednesday.
If history repeats itself, SOL could see a massive upward rally to as high as $1,000, fueled by increased demand from Solana treasury companies and possible approval of spot Solana ETFs in the US.
Solana price rally stalls at $250 for now
Solana’s 60% rally from Aug. 2 lows around $155 ran into resistance at $250, as profit-taking and buyer exhaustion kicked in.
“$SOL is approaching the first resistance zone,” said analyst Crypto Seth in an X post on Sunday, as the price approached $250. “Let’s see how much of a pullback we get.”
The relative strength index rose to as high as 70 on the daily chart and 83 in the four-hour time frame, signalling overbought conditions. This triggered a 7% correction from eight-month highs at $250 on Sunday to current levels around $237.
This price action formed a descending parallel channel on the four-hour chart, as shown below. An important area of support for SOL lies within the $230 and $227 demand zone, which are the lower boundary of the channel and the 50 SMA, respectively.
Below that, the price could drop toward $220 before making another attempt at recovery.
Despite the ongoing pullback, many analysts are still convinced of Solana’s ability to continue its rally to $300 and beyond.
“$SOL is showing strong momentum,” Cipher X said in an X post on Monday, adding that the nine-weekly EMA crossover above the 15-weekly EMA confirmed the uptrend.
“The next liquidity target sits near $300, where buyers could push for a breakout.”
As Cointelegraph reported, breaching the $250-$260 resistance will put the next significant resistance at $295 in play, fueled by increasing futures open interest and total value locked.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.