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Solana has experienced a notable increase of 10.1% over the past week and soared 70.8% this month, shows data from Coingecko. The Relative Strength Index (RSI), a critical momentum indicator, is presently above 60, suggesting strong buying momentum in the market.
However, it’s nearing the overbought zone (above 70), which might imply a potential short-term overvaluation of Solana, possibly leading to a market correction or consolidation phase.
The trajectory of Solana’s bullish trend is further supported by the upward movement of key moving averages – the 50-day Simple Moving Average (SMA) and the 20-day Exponential Moving Average (EMA). Currently, Solana’s trading price is above these averages, reinforcing the bullish market sentiment.
The 50-day SMA, sitting at approximately $42.2, is likely to act as a significant support level. A crucial barrier is observed near the $60 mark on the resistance front, formed by recent price highs.
Continued upward movement, breaking past the $60 resistance with high trading volume, could signal further bullish momentum. The next resistance could be at higher psychological levels or past resistance zones. A breakout above this channel could indicate a strong bullish move.
Solana’s presence in the overbought territory indicates possible upcoming selling pressure as traders might engage in profit-taking, potentially causing a price correction or consolidation. Nonetheless, it’s crucial to note that in strong bullish markets, assets can sustain overbought conditions for extended periods.
A decline below the moving averages, particularly the $42.2 50-day SMA, could suggest a sentiment shift and a potential trend reversal. A further drop below significant support levels might trigger additional declines as stop-loss orders are activated.