- Solana price hit an all-time high at $57.69 on May 18 and is currently retracing.
- Depending on the market conditions, SOL pullback could extend up to 17%.
- Although unlikely, a breakdown of the 50% Fibonacci retracement level at $39.74 might put a dent in the upside narrative.
Solana price shows the exhaustion of the bullish momentum, which has led to a minor retracement to the immediate demand barrier. There is a chance that this support area might be breached, which will allow SOL to test a critical level before reversing.
Solana price temporarily halts its upward moves
Solana price is currently trading at $53.60, just above a demand zone that extends from $45.68 to $51.98. Judging by the weak market structure of cryptocurrencies, it is likely that SOL will retrace before heading to new highs.
Interestingly, the Momentum Reversal Indicator (MRI) flashed warnings in the form of a yellow ‘down arrow’ on the 12-hour chart. This technical formation indicates that further appreciation in Solana price could result in a red ‘one’ 12-hour candlestick, a cycle top.
If this were to happen, the reversal setup forecasts a one-to-four candlestick correction. Therefore, the short-term retracement that prevents the MRI from presenting a sell signal would help SOL in the long run.
The demand zone extending from $45.68 to $51.98 is the buyers’ first area of interest. Solana price could drop to the 61.8% Fibonacci retracement level at $44.14, which is approximately 17% away from its current position.
Investors can expect a reversal around this area, leading to a retest of the current all-time high at $57.69. If the bullish momentum persists, Solana price could rise 17% to tag the 127.2% Fibonacci extension level at $68.52, a new all-time high.
Under extreme buying pressure, SOL could set up new highs at the following areas of interest – $73.81 and $81.41.
While unlikely, a drop to the 50% Fibonacci retracement level at $39.74 could result in a sideways movement, especially if buyers lack the conviction to rescue SOL. Such a move would represent a 25% drop but not hurt the bullish thesis detailed above.
However, a breakdown of the 38.2% Fibonacci retracement level at $35.34 would invalidate the optimistic outlook and trigger a 15% crash to $29.89.