u.today
Solana (SOL), the fifth largest cryptocurrency by market capitalization has recently completed a golden cross, a bullish technical pattern that typically signals potential upward momentum.
A golden cross happens when a short-term moving average, such as the 50-day SMA, crosses above a long-term moving average, mostly the 200-day SMA, indicating that the asset's price may rise significantly soon.
In the case of Solana, its daily SMA 50 has crossed above the daily SMA 200, indicating a golden cross.
However, the emergence of the golden cross coincides with a profit taking in Solana's price. After four days of gains, Solana reached a high of $183 on Oct. 29, where it encountered resistance.
At the time of writing, SOL was down 2.28% in the last 24 hours to $174, reflecting the broader profit-taking on the crypto market. BTC rose beyond $73,000 on Tuesday, bringing its seven-day gains to 9% and sparking a market rise across major cryptocurrencies, including Solana.
A number of cryptocurrencies, including Solana, were trading in the red as Bitcoin's price fell slightly due to profit-taking.
What's next for Solana's price?
Solana's last golden cross in October 2023 pushed the SOL price up by almost 895%, reaching highs of $209 in March. Given that past results may not guarantee future outcomes, no one knows if this history might repeat itself for Solana.
However, a common criticism of moving average-based indicators is that they are lagging signals that might trap traders on the wrong side of the market. This is because the market might have been oversold or overbought before the crossover occurs.
As it stands, Solana is trying to rally toward the overhead barrier at $210, but the bears are posing a strong challenge at $183.
If buyers do not give up much ground from their current position, the chances of a break over $183 grow. Solana prices could rise to $193, where the bears are anticipated to launch a robust defense.
This optimistic outlook will be undermined in the short term if the SOL price falls below $159. It might push Solana below the 50-day SMA around $149, indicating that bulls are selling.