Solana (SOL) has broken out of a long-term resistance line and is trying to create the final part of a bullish pattern.
Solana is gradually emerging as one of the most important decentralized finance (DeFi) ecosystems in the cryptocurrency industry. On Wednesday, two well-known projects on the Solana network, Alfprotocol and Soldex, announced a partnership.
Alfprotocol is a DeFi platform that offers leveraged and unleveraged trading and yield farming to its participants. Soldex is a community-run trading platform that aims to address issues related to decentralized exchanges (DEXs) such as liquidity, small volumes and slow transaction speeds.
The partnership further solidifies the role of the Solana DeFi ecosystem in the industry and positions Alfprotocol as a gateway to that ecosystem.
While this pattern has had a positive impact on the price in the short-term, the long-term trend is still unclear.
raised floor pattern
SOL had dipped below a descending resistance line since hitting an all-time high of $260 in November 2021. The downside led to a low of $25.78 in June.
The price has since risen and managed to break out of the line on August 6th. At the time of the eruption, the line had been in effect for 273 days. Breakouts from such long-term structures are usually a sign of a bullish trend reversal.
However, the price failed to continue its upward movement after the breakout. On the contrary, it pulled back to confirm the line as support. This is still a common move that occurs after breakouts.
More importantly, SOL appears to be about to create a double bottom, which is considered a bullish pattern. Furthermore, the double bottom has been combined with a bullish divergence on the weekly RSI (green lines). Such divergences often precede significant upside moves. Therefore, the divergence increases the validity of the breakout.
If an upward move ensues, the next areas of resistance would be $80 and $115 respectively.
Future SOL movement
The 6-hour chart supports the continuation of the upward movement, thereby confirming the double bottom pattern. There are two reasons.
First, the price has broken out of a descending resistance line. Second, the 6-hour RSI has generated a bullish divergence (green line). So, these two readings support the continuation of the upward movement.
The initial resistance area comes in at $37 created by the 0.382 Fib retracement resistance level and a horizontal resistance area. A move above this area would do much to confirm that SOL has started a bullish trend reversal.
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