The other day we took a good look at Solana's technicals. Today, we'll do something even more relevant: we'll look at its strength in comparison to that of Bitcoin. But why is that?
Well, because given how much Bitcoin has rallied during September, and at weak trading volumes at that, Bitcoin is and remains fragile. In this sense, if Solana were to look weak in direct relationship to that of Bitcoin's spot price then we can safely assume Bitcoin is in for a nasty dump to follow - one that might take us as far down as the low to mid $20 000's.
If, on the other hand, Solana were to show continued strength in relation to Bitcoin then we might very well be in for an alt season. This would be THE ideal low risk/high reward entry spot.
Let's now begin by taking a good look at SOLUSD/BTCUSD.
On the daily chart, the long diagonal trend line from early January has now flipped and acts as resistance. Right now SOL/BTC is testing it from below.
It tested and broke above it in August. The question now remains: can it do it again?
The next question at hand is how this temporary correction will play out. Is the ABC completed already, or is it just the subwave structure of a bigger A-wave?
If Bitcoin were to plunge down to the low to mid $20 000's, we should automatically expect Solana to vastly under perform. For as fast a runner Solana is on the upside, it sure is fragile and volatile on the downside.
One thing ... a bad omen, indeed ... that we need to keep an eye on is the upper bearish blue RSI line on the 2-day chart.
On the previous two successful occasions upon which SOL/BTC closed on this line from below, Solana immediately proceeded by under performing versus that of Bitcoin by -85% and -34% respectively.
This incredibly bearish signal would, however, be neutralized if the RSI were to close above it and with at least a 1% safety margin.
Practically speaking, the ideal scenario to accomplish this AND to turn the ship around for a truly bullish set-up would be for SOL/BTC to:
1) break above the primary diagonal resistance line;
2) take out the recent pivot high from early October this year
Naturally, this would all have to happen within the upcoming few days, as the diagonal trend line would otherwise keep pushing its technical resistance further up. In such case, taking out the pivotal high wouldn't make much of a difference in itself.
I'm fully aware that this entire scenario is unlikely to unfold by the end of the week. Yet, if it still were to, it'd be one of the most bullish signs we could wish for in Solana, and reason alone to ladder in heavy low-risk longs.
For that's the name of the game: low risk/high reward.
Well, because given how much Bitcoin has rallied during September, and at weak trading volumes at that, Bitcoin is and remains fragile. In this sense, if Solana were to look weak in direct relationship to that of Bitcoin's spot price then we can safely assume Bitcoin is in for a nasty dump to follow - one that might take us as far down as the low to mid $20 000's.
If, on the other hand, Solana were to show continued strength in relation to Bitcoin then we might very well be in for an alt season. This would be THE ideal low risk/high reward entry spot.
Let's now begin by taking a good look at SOLUSD/BTCUSD.
On the daily chart, the long diagonal trend line from early January has now flipped and acts as resistance. Right now SOL/BTC is testing it from below.
It tested and broke above it in August. The question now remains: can it do it again?
The next question at hand is how this temporary correction will play out. Is the ABC completed already, or is it just the subwave structure of a bigger A-wave?
If Bitcoin were to plunge down to the low to mid $20 000's, we should automatically expect Solana to vastly under perform. For as fast a runner Solana is on the upside, it sure is fragile and volatile on the downside.
One thing ... a bad omen, indeed ... that we need to keep an eye on is the upper bearish blue RSI line on the 2-day chart.
On the previous two successful occasions upon which SOL/BTC closed on this line from below, Solana immediately proceeded by under performing versus that of Bitcoin by -85% and -34% respectively.
This incredibly bearish signal would, however, be neutralized if the RSI were to close above it and with at least a 1% safety margin.
Practically speaking, the ideal scenario to accomplish this AND to turn the ship around for a truly bullish set-up would be for SOL/BTC to:
1) break above the primary diagonal resistance line;
2) take out the recent pivot high from early October this year
Naturally, this would all have to happen within the upcoming few days, as the diagonal trend line would otherwise keep pushing its technical resistance further up. In such case, taking out the pivotal high wouldn't make much of a difference in itself.
I'm fully aware that this entire scenario is unlikely to unfold by the end of the week. Yet, if it still were to, it'd be one of the most bullish signs we could wish for in Solana, and reason alone to ladder in heavy low-risk longs.
For that's the name of the game: low risk/high reward.