As expected in the previous article, Solana (SOL) continues to sell off in the downtrend channel towards its five-month support trend line and then rallies from there.

At the time of this writing, SOL is approaching a key area of value. Any close above that pattern and the 20 EMA (red) would make it possible for SOL to test the $105-110 range around its 50 EMA (cyan). Defending the $85 mark is critical to prompt a change in the current trend and prevent further declines. At press time, SOL was trading at $90.2235.

SOL Daily Chart

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Source: TradingView, Sol/USD

The most recent bearish phase saw a retracement of up to 71% as it broke through important price points in the last three months while forming two bearish signs. As a result, the price action fell below the 200 EMA (yellow). Thus, revealing the possible start of a long-term downtrend. Most importantly, SOL hit a six-month low on February 24.

At this stage, the recent average has fallen below the 200 SMA. In addition, the distance between the 20 and 50 EMAs has almost overstretched after the current losses. Therefore, a potential bullish rally is conceivable in the coming days as the distance between these lines narrows.

Moreover, over the past five days, SO1 has shown a strong rejection of the lower price as it approaches the six-month support level of $85. As a result, it witnessed a bullish pin bar, reiterating the bullish intent.

A close above the upper trendline of the lower channel would be a strong trigger to enter a buy position, while SOL would test the $105 handle ahead of a possible pullback. A break at the five-month support level (dashed line, yellow) before hitting the above level should not surprise investors/traders if the longs decrease.

Fundamentals

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Source: TradingView, Sol/USD

A pattern break in the RSI could find resistance at 46 ahead of the intermediate test, which could open a recovery window for the bulls. The bulls need to use this momentum to finally overturn their long-term resistance at the 20 EMA.

In addition, the MACD histogram is in a tight phase and is likely to be volatile in the coming days. Although its lines show a bullish edge, they need to approach the midline to reaffirm the strong position.

Conclusion

A strong confluence was observed following the willingness of buyers to step in at the $85 support level. Any close above the $94 handle would increase the likelihood of a retest of the $105 handle.

Also, considering the impact of the broader sentiment of the Bitcoin movement is crucial to making a profitable move.