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The Solana price has experienced a dramatic surge in recent weeks, reaching a new yearly high and drawing significant attention from investors.
However, this bullish momentum was short-lived as the cryptocurrency saw a sharp drop to around $208.86 just a day later, although it still trades significantly higher than it was just weeks ago, and technical indicators suggest the rally could continue, potentially reaching new all-time highs.
What is the reason behind the drop in Solana’s price?
On Tuesday, November 12, Solana’s price plunged from the just attained yearly high of $224 to approximately $208.86 leading to the liquidations of $14.2 million long positions.
This unexpected pullback follows a period of impressive growth for Solana, where it broke through key technical barriers, including the 231-day descending resistance trend line and the $200 horizontal resistance.
These breakouts fueled optimism that Solana could continue its upward trajectory.
However, after reaching the yearly high of $224 on November 11, 2024, a correction seemed inevitable as the market consolidated gains before potentially advancing further.
The drop on November 12 was not entirely unexpected, as many technical indicators were signaling overbought conditions, though the pullback does not appear to have broken the overall bullish trend.
Solana’s movement remains supported by solid on-chain data and a strong technical foundation, suggesting that the rally could resume once the current correction concludes.
Solana’s strong technical outlook
Despite the recent price dip, Solana’s overall technical outlook remains positive.
The cryptocurrency has shown impressive resilience, with a series of bullish daily candlesticks since early November.
As of the latest data, Solana is in the fifth wave of its upward movement, which began in early 2023.
According to technical analysis, the price could potentially reach between $273 and $306 in the coming weeks, with the possibility of breaking its all-time high of $259.96 in November 2021.
One of the most important technical developments is the breakout from a downward-sloping parallel channel pattern on the weekly chart, which occurred at around $210.18.
This breakout has been confirmed with a strong weekly close, reinforcing the bullish case for Solana.
The Relative Strength Index (RSI) is also in a strong position at 66, which suggests the momentum is still bullish without reaching overbought territory.
In addition, Solana’s Moving Average Convergence/Divergence (MACD) is above its bullish threshold, further confirming that the cryptocurrency could experience more upward movement.
Both indicators, RSI and MACD, are signaling that Solana still has room to grow and is likely to continue its bullish trend once the correction phase concludes.
Supporting on-chain data
On-chain data provides further support for the bullish outlook for Solana.
As of November 12, Solana’s open interest on futures exchanges reached a new all-time high of $4.54 billion, a clear indication of increasing capital inflows.
Source: CoinglassOpen interest is a key metric for gauging market sentiment, and its rise suggests that more investors are entering the market, anticipating further price increases.
Moreover, Solana’s decentralized exchange (DEX) trading volume saw a significant surge, rising from $1.9 billion on November 8 to $4.6 billion on November 11.
This increase in trading volume signals strong interest in Solana’s ecosystem, further supporting the possibility of a continued upward trajectory.
Despite the recent price drop, the combination of technical indicators, on-chain data, and a solid fundamental outlook suggest that Solana could still reach new all-time highs in the near future.
If the bullish momentum resumes, Solana could target $276.55, potentially surpassing its previous all-time high and setting a new record for the cryptocurrency.
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