Solana price rally risks exhaustion after SOL's 120% pump in two weeks

Solana (SOL) terms is up an awesome 60% since the caller year, partially boosted by hype surrounding meme cryptocurrency Bonk (BONK). However, the SOL/USD brace present shows signs of exhaustion, raising anticipations that the token whitethorn spot a short-term correction successful the coming days.

Solana turns overbought

Solana is 1 of the champion performing cryptocurrencies truthful acold successful 2023 aft being one of the biggest losers successful 2022. 

On Jan. 9, SOL's terms jumped to arsenic precocious arsenic $19.50, oregon astir 120% gains successful a betterment rally aft sliding beneath $8 connected Dec. 29, 2022.

But the terms spik besides turned Solana into an overbought asset, per its regular relative spot index (RSI) speechmaking supra 70, arsenic shown below.

SOL/USD regular terms chart. Source: TradingView

Traditional investors typically spot an overbought RSI arsenic a imaginable merchantability signal, fixed the indicator has historically coincided with a play of purchaser exhaustion. As a result, SOL's terms could participate a correction oregon a sideways consolidation signifier to bring backmost its RSI beneath 70.

Related: Bitcoin terms taps $17.5K arsenic traders successful ‘disbelief’ uncertainty crypto rally

Should it happen, the Solana token's adjacent downside people appears astatine astir its 50-day exponential moving mean (50-day EMA; the reddish wave) adjacent $14.50.

Meanwhile, an extended selloff could onshore the terms adjacent its 20-day EMA (the greenish wave) adjacent $13.35, oregon a 20% correction.

Buy the SOL terms dip? 

On a longer-timeframe chart, however, SOL eyes a decisive breakout determination supra its prevailing absorption level of astir $17.50.

SOL/USD play terms chart. Source: TradingView

The $17.50 level was instrumental successful capping SOL's downside attempts successful the April-July 2021 session. Therefore, a palmy flip of the absorption level into enactment could punctual traders to unfastened caller bullish positions toward $25, a level coinciding with SOL's descending trendline absorption (black).

Conversely, failing to flip the $17.50 absorption level could hazard sending SOL backmost beneath $8, a possibility if 1 considers the negative fundamentals surrounding the Solana ecosystem.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.