Analyst Warns Solana Could Signal Bearish Shift as Key Levels Are Tested

An analyst warns that Solana may signal a bearish shift in the market if key levels are breached, as indicators show declining momentum.

Solana (SOL) recently exhibited a sharp rebound from its previous dip, reaching about $173, a 12.8% gain over the past week. Its trading momentum has shown stability, increasing by 0.05% over the past 24 hours.

However, an analyst’s perspective indicates caution for Solana, identifying a potential trigger for a bearish shift.

Analyzing Solana for Bearish Signal

Analyst Ceciliones on TradingView suggests that traders should consider Solana as a key indicator of market conditions. Currently ranked fifth by market cap at $78.2 billion, Solana’s past performance positions it as a focal point for investors. He noted that SOL surged over 600% last October after breaking a 300-day accumulation phase, serving as a strong entry signal for other crypto assets.

Now, the weekly chart reveals that SOL is forming a Wyckoff distribution pattern. The analyst encourages viewers to verify this observation with the provided chart.

He highlights that the 0.786 Fibonacci level represents SOL’s potential bottom. Notably, this level corresponds to the $125 price point for Solana.

According to the analyst, if this level is broken on a weekly chart, it could serve as a clear signal for investors to exit the market and convert their assets to cash. The analyst anticipates this scenario could unfold within two months.

Momentum Indicators Support Bearish Perspective

Technical indicators support the analyst’s observations. On the 1-day timeframe, Solana’s relative strength index (RSI) stands at 67.72, slightly below the 70-overbought threshold.

While the RSI’s upward trend shows strong buying momentum, its recent dip from overbought levels suggests a possible slowdown or correction. 

Meanwhile, the MACD indicator presents a bullish trend, with the MACD line at 7.38 and the signal line at 5.10. The narrowing gap between the two lines hints at stabilizing momentum or a possible crossover.

Solana Whales Activities

On October 23, a notable whale withdrew 32,695 SOL (worth $5.46 million) from Binance, redirecting funds towards meme coins. The investments included $3 million in GOAT tokens, $1.96 million in GIGA tokens, and $484,000 in FWOG tokens.

Additionally, Pump.fun, a meme coin launch platform within the Solana ecosystem, sold 40,000 SOL tokens at an average price of $156.40, leveraging favorable market conditions. Since its launch, Pump.fun has earned nearly 969,945 SOL in fees, with 56% of the tokens sold to realize profits.