Key insights:
The Supertrend indicator for Solana has issued a “buy” signal, which previously triggered a 1,300% price increase.
Resistance at $250 and overbought signals indicate a potential retest of $220 for SOL.
Solana’s (SOL) SuperTrend indicator generated a “buy” signal on its weekly chart, a rare event that has historically led to significant price surges.
Past signals resulted in price increases of 620%-3,200%
The SuperTrend indicator on Solana’s weekly chart turned from red to green last week, indicating a bullish trend as it moved under the price.
This tool overlays the price chart, similar to moving averages, and utilizes the average true range in its analysis to assist traders in spotting market trends.
Related: Bitcoin and Solana ETPs drive a $3.3B upswing in crypto inflows: CoinShares
Previous occurrences of this indicator during the 2021 bull run saw price surges of 3,200% and 620%, as indicated in the chart below.
The last “buy” signal appeared in July 2023, leading to a remarkable 1,339% rise to an all-time high above $295 on January 19, from just over $20.
“The Supertrend will indicate a green/buy signal if $SOL closes a weekly candle above $220.45,” noted analyst Dorkchicken in a post last week, adding:
“The last instance was in 2023, and prices soared from $39 to $294.”
The SuperTrend indicator switched from red to green as SOL crossed $220 on Wednesday.
If history holds, SOL could embark on another major rally, possibly reaching $1,000, driven by increased interest from Solana treasury firms and potential spot Solana ETF approvals in the U.S.
Solana’s rally pauses at $250 for now
The 60% surge from Solana’s August 2 lows near $155 encountered resistance at $250, leading to profit-taking and buyer fatigue.
“$SOL is nearing the initial resistance zone,” stated analyst Crypto Seth in an X post on Sunday as the price neared $250. “We’ll see how much of a pullback occurs.”
The relative strength index climbed to 70 on the daily chart and touched 83 on the four-hour chart, suggesting overbought conditions. This led to a 7% correction from the eight-month peak at $250 to around $237.
This price movement created a descending parallel channel on the four-hour chart, as shown below. Key support for SOL can be found in the $230 and $227 demand zones, representing the lower boundary of the channel and the 50 SMA, respectively.
If it falls below this, the price may drop to $220 before attempting another recovery.
Despite the current pullback, many analysts remain optimistic about Solana’s capability to rally towards $300 and beyond.
“$SOL exhibits strong momentum,” Cipher X commented in an X post on Monday, noting that the nine-weekly EMA crossing above the 15-weekly EMA confirmed an upward trend.
“The next liquidity target is near $300, where buyers may aim for a breakout.”
As reported by Cointelegraph, breaking through the $250-$260 resistance could open the way to the next key level at $295, supported by rising futures open interest and total value locked.
This article is not investment advice. All investment and trading actions carry risk, and readers should perform their own research before making decisions.
