Solana (SOL) Faces Crucial Test as Price Action Retraces to Key Support Level

Crypto analyst Ali Martinez has highlighted a crucial moment for the price action of Solana, pointing to a key support level within a parallel channel.

Crypto analyst Ali Martinez has highlighted a crucial moment for the price action of Solana, pointing to a key support level within a parallel channel.

His technical analysis, which is based on SOL price action on the daily candlestick timeframe, shows that the altcoin has been trading in an uptrend channel since July 2024.

Crucially, this uptrend channel has been highlighted by the formation of higher lows and higher highs as Solana continued to push to new all-time highs.

Now, Martinez noted that holding above a key support level could reinforce the altcoin’s uptrend towards the upper trendline of the support channel.

Analyst’s Technical Outlook: A Make-Or-Break Support Level

At the time of Martinez’s analysis, Solana was trading at $193, following a barrage of declines throughout last week.

Crucially, this decline saw Solana hit the bottom trendline of this uptrend channel. As such, the analyst noted that SOL’s action from here could determine its next big move.

If Solana manages to hold above this support level, the uptrend could regain strength, and the channel will still be in play.

In this case, Solana will still be on track to push toward the upper end of the channel, which puts the price target around $387. On the other hand, if the support fails, a deeper correction could be on the table.

Solana Price Action: A Rollercoaster Ride To $293 And Back

SOL is one of the best-performing cryptocurrencies in the current crypto cycle, with its price recently skyrocketing to a new all-time high of $293 on January 19.

The rally was primarily driven by a wave of interest following the launch of the Official Trump meme coin on the Solana blockchain, adding momentum to an already bullish trend for the altcoin. However, the euphoria has since cooled off, with Solana experiencing a 30% decline since the all-time high.

Since the time of the analysis, Solana has managed to rebound slightly from the lower boundary of its uptrend channel. Solana is currently trading at $204, meaning it has increased by about 5.7% since Martinez highlighted the key support zone.

This reversal suggests that the uptrend channel is still in play, and Solana could continue to push upwards until it reaches $389. Interestingly, this price target at the upper end of the channel is reinforced by the Fibonacci extension indicator.

This indicator is extended from the Solana low of $109 in August 2024, and the $389 price target is at the 1.272 extension level. The significance of this extension is reinforced by the fact that Solana’s January peak also coincided with the 1.0 Fibonacci level.

Despite this recovery, the bullish momentum has yet to fully confirm itself with a strong breakout. There is still a possibility that Solana could retest the lower boundary of the channel again before establishing a more decisive uptrend.