WXY Correction and the Path Forward:
Initially, Solana appeared to be consolidating within a triangle pattern, but the structure was erratic and lacked clarity. After re-evaluating the price action, we have re-labeled it as a WXY correction. This structure provides a cleaner and more coherent view of the current price behavior.
In the broader scheme, we are within Wave Y, which, as expected, is unfolding in a three-wave corrective structure. The earlier Wave A was completed, and we are currently progressing through Wave B. This is part of a larger corrective pattern that we expect will ultimately conclude with Wave C, completing the WXY formation.
Wave B Internal Structure:
Within the Wave B of the WXY pattern, we are currently tracking an internal Wave C. This Wave C is a five-wave impulsive move, consistent with the typical behavior of a C-wave in corrective patterns.
- Within this internal Wave C, we have reached Wave 4 of Wave 3. This is a critical juncture, as Wave 4 corrections often exhibit shallow pullbacks, and we expect a continuation of the upward trend once Wave 4 concludes.
Expectations for Wave 4 and Wave 5 of Wave 3:
- Wave 4 is likely unfolding in a simple corrective ABC structure, where we have just completed Wave A of this correction and are now within Wave B. This Wave B has presented a small upward push, but we anticipate a final leg down in the form of Wave C before concluding the Wave 4 correction.
- The support zone for this Wave C of Wave 4 aligns closely with the Fibonacci retracement levels. We anticipate a retest of the 0.382 to 0.5 retracement levels around $143 – $140, providing a potential bounce area before resuming the upward movement.
- Once this correction completes, Wave 5 of Wave 3 should propel Solana upwards, likely testing higher levels, possibly around the $150-$155 mark as shown in the smaller timeframe chart.
Larger Timeframe Analysis:
Zooming out to the larger timeframes, we see that Solana is moving within a descending channel pattern. This broader pattern frames the WXY correction, with the final Wave Y set to complete as we move through the final Wave C.
- Wave C of Y will likely test the lower bounds of the channel, which aligns with the key support levels. This could drive the price toward $96 to $100, a level where we anticipate significant demand to emerge.
- As we progress through Wave B and prepare for the final Wave C, it’s important to watch for key technical signals that might confirm this bearish move.
Key Technical Indicators:
- RSI Divergence: The RSI indicator shows some mild bearish divergences, particularly as Solana moved into Wave B of the current internal structure. This suggests that upward momentum may be slowing, consistent with our expectation of a final downward leg in Wave C.
- Channel Resistance: The upper boundary of the descending channel may provide resistance if Wave B extends slightly further, which could temporarily delay the formation of Wave C. This upper boundary should be monitored closely.
Strategic Positioning:
Given the current Elliott Wave count and the alignment of Fibonacci support levels, we are cautious yet optimistic about the opportunity to capitalize on the completion of Wave C of Wave 4 and the subsequent Wave 5 of Wave 3. As this short-term correction plays out, we will be watching for a solid entry point near the $140 level for a potential long position, expecting a bounce back toward the $150 region.