Solana and Avalanche Look Ready to Retrace

Solana and Avalanche look like they're in trouble after failing to overcome major supply barriers.

Solana and Avalanche Look Ready to Retrace
Shutterstock cover by NeoLeo (edited by Mariia Kozyr)

Key Takeaways

  • Solana and Avalanche are currently presenting sell signals on their six-hour charts.
  • The developments coincide with rejections from their 200-hour moving averages.
  • If both assets continue to trend down, SOL could dive to $35, while AVAX could hit $18.

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Solana and Avalanche appear to have reached overbought territory, potentially leading to a significant correction. 

Solana and Avalanche Face Corrections

Solana and Avalanche look primed for brief corrections after getting rejected from crucial areas of resistance. 

SOL has surged by nearly 29% over the past week, rising from a low of $30.80 to a high of $39.70. The sudden upswing took SOL to test the 200-hour moving average on its six-hour chart. Although it attempted to slice through this resistance level multiple times, it did not show enough strength to produce a candlestick close above it. 

The lack of momentum at such an important hurdle seems to have led to a spike in profit-taking that has resulted in a 7.9% correction over the past few hours. The Tom DeMark (TD) Sequential indicator is currently presenting a sell signal, hinting at a steeper retracement. If Solana loses the $36.80 level as support, a downswing toward the 50-hour moving average at $35 or even $33.40 is possible.

Solana Rice Chart
Source: TradingView

Avalanche looks like it could be headed the same way as Solana. After enjoying an 34% uptrend since Jun. 30, AVAX failed to slice through the 200-hour moving average on its six-hour chart. The rejection has led to a spike in selling pressure that could lead to further losses after the TD Sequential presented a sell signal. 

The recent six-hour candlestick close below $20 may have confirmed the pessimistic outlook. Now, AVAX appears to be heading toward the 50-hour moving average at $18. From there, it could collect liquidity for a potential rebound.

Avalanche price chart
Source: TradingView

Given the strength of the recent correction, Solana and Avalanche need to print sustained closes above their 200-hours moving average to be able to invalidate the bearish outlooks. If they succeed, SOL could rise to $43, while AXAX could make a break for $24.

Disclosure: At the time of writing, the author of this feature owned BTC and ETH.

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