- Solana price produced a sell signal on January 19, resulting in a 13% crash.
- Investors can expect this correction to continue, resulting in another 17% drop.
- A daily candlestick close above $23.38 that flips it into a support floor will invalidate the bearish thesis.
Solana price shows a clear shift in the market structure after forming a local top at a crucial hurdle. This development has a chance of sliding lower and triggering a steep correction for SOL holders.
Solana price cracks under pressure
Solana price tripled between December 29, 2022, and January 16, 2023, as it rallied 212% in less than three weeks. This explosive rally hit $23.38, which is the midpoint of the 79% crash that occurred between November 5, and December 29, 2022.
This mean-reversion play pushed Solana price to produce a daily candlestick close above the $23.38 hurdle but failed to flip it into a support floor, revealing the first sign of exhaustion. Additionally, SOL lost 9% of its market value on January 18, which produced a shift in the market structure favoring the bears.
As Solana price pushes higher in a pullback, it is likely to get rejected at $22.70, resulting in a continuation of the downtrend. At the same time, the Relative Strength Index (RSI) has also slid below the overbought zone at 70.
A continuation of the selling pressure from investors booking profits could send Solana price to retest the $17.66 support level and allow the RSI to retest at 50. This move would constitute a 17% loss for SOL from the current position.
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SOL/USDT 1-day chart
On the other hand, if Solana price produces a daily candlestick close above 50% Fibonacci retracement level at $23.38 and flips it into a support floor, it will invalidate the bearish thesis. In such a case, SOL could target the 62% retracement level at $27.08 or the 70.5% retracement level at $29.70 as targets for the near term.