A new bullish pattern
After being in a long-term downswing since May 2021, Solana price analysis from the last 50 days is showing that the market is in a bullish trend. Since 27 January, SOL has seen 3 lower lows and 3 lower highs.
Measuring the distance between the first swing high and low to the breakout point, it seems like SOL price is following a strong uptrend, with a prediction of hitting $110, equivalent to a 23% increase. If SOL is able to produce a daily close above $89.25, this scenario is completely feasible.
Solana price is trading close to the daily demand zone, extending from $68.52 to $81.99. This means that SOL is trading inside a descending wedge, also considered a bullish pattern. The demand zone will be the extra push for SOL to reach a new high.
At this point, $110 is the theoretical target, but the uptrend could indeed extend to $115. Moving beyond this barrier is unlikely, however, since it is where the upside for SQL bulls is capped.
Moreover, the Relative Strength Index (RSI), an indicator measuring the momentum of assets and is often used to identify potential pivot points based on overbought and oversold conditions, is looking pretty good for Solana. Since January, the RSI has seen multiple higher lows, as opposed to the lower lows of the price. This phenomenon is called bullish divergence. An increase in RSI suggests an uptick in momentum and it often precedes bullish trend reversals.
In short, investors can expect more upside activity from Solana.
Although it seems like the on-chain volume is on the decline and it may refute our bullish thesis, for a falling wedge, this decline in volume is crucial for an explosive breakout. Investors may become less interested and resort to liquidating their positions. Once all sellers finish selling their positions, the downward trend will come to end.
At the same time, the presence of the demand zone suggests a formation of a bottom anywhere from $68.52 to $82.
On-chain volumes | Source: Santiment
Nonetheless, in the case where Solana price drops below $68.52, it will invalidate the falling wedge and the demand zone. If this scenario happens, SOL will have to explore lower support levels.
