Solana (SOL) Surges in Big Bounce: Real Recovery or Just a Relief Rally?

Solana (SOL) has recorded a 49% retracement so far in this very bearish phase, which many believe is the start of further downside into the depths of a bear market. On the other hand, could Tuesday’s 6% bounce for $SOL be the beginning of a full-scale recovery?

$SOL bounces from a convergence of supports

Source: TradingView

The descending channel (in blue) in the 4-hour chart above illustrates how the $SOL price has remained in this bearish pattern for the full 49% of its retracement. That said, it has just touched bottom. A bottom that is bolstered by the strong $127 horizontal support and the bull market support trendline.

Does this mean it’s onwards and upwards from here? It could be, although the price did not actually retest the horizontal support or the major trendline. Therefore, there is the possibility that the price could still come back down in order to do so.

Even if this does happen, it might be expected that the price holds the strong support below. Obviously, the fortunes of Bitcoin will have a huge bearing on this.

Can the bulls sustain the bounce?

Source: TradingView

Putting aside thoughts of the supposed liquidity scarcity, the daily chart looks pretty bullish for $SOL. Buyers would have been eyeing up the convergence of the major trendline, the horizontal support, and the bottom of the descending channel with a view to a long position, and buy they did. A 6% bounce from this area has been the reward so far. 

Nevertheless, the bounce has reached a horizontal resistance level and has paused here. It now remains to be seen whether there will be a rejection, or whether the bulls can power on through. Given the still extremely negative market sentiment, it might take a bit more chop sideways before the $SOL price can break through.

In favour of the bulls are the Stochastic RSI indicators which have just crossed up from the bottom, potentially about to bring upside price momentum. Also, the RSI indicator has just bounced out of oversold territory. The last time it was here was back at the end of February this year, which led to a 42% bounce.

Everything set for a big rally?

Source: TradingView

The weekly time frame for $SOL reveals the incredible strength of the $127 support which has acted as such since the end of 2023. With the further support of the bull market trendline, and the bottom of the descending channel, it is not expected that $SOL drops from here. 

Another bullish factor are the Stochastic RSI indicators for this high time frame which are at rock bottom now. Everything would appear to be set for a big rally from here. Will it happen? The majority across social media are calling for a bear market – the charts say otherwise. Who will be right?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.