SOLUSDT Market Overview

Summary
• Price surged 7.8% on strong volume into early Friday before consolidation and a pullback.
• Momentum remained elevated but showed signs of exhaustion by late afternoon.
• Volatility expanded midday before stabilizing within Bollinger Bands.

Solana/Tether (SOLUSDT) opened at $156.98 on Friday (12:00 ET – 1), surged to a high of $164.48, and closed at $156.66 at 12:00 ET. Total volume for the 24-hour period was 3,433,199.66 SOL, with a notional turnover of approximately $556,433,024.00. The pair saw a strong bullish charge during the early North American session, forming a bullish engulfing pattern on the 15-minute chart before reversing into a consolidation phase.

Structure & Formations

Price action formed a bullish engulfing pattern on the 15-minute chart between 17:30 and 18:00 ET, confirming a breakout above the prior range. However, the subsequent failure to sustain above $164.48 led to a bearish reversal pattern in the form of a broadening top. Key support levels include $160.00 and $157.30, with resistance at $162.00 and $163.50. A doji formed near $162.50 midday, signaling indecision and potential reversal.

Moving Averages

On the 15-minute chart, the 20-period and 50-period moving averages were both bullish with the price above both, confirming short-term strength. On the daily chart, the 50-period MA is trending higher and currently at $159.60, while the 100-period MA is at $157.90. The 200-period MA is at $156.45, placing the current close near the lower band of the daily trend. Price appears to be consolidating above the 200-period MA, suggesting a potential resumption of the uptrend if the move holds.

MACD & RSI

The MACD on the 15-minute chart remained in bullish territory with a narrow histogram, signaling a slowdown in momentum. RSI spiked above 70 in the early afternoon, confirming overbought conditions, and dropped below 60 by 18:00 ET, suggesting a reversal. On the daily chart, RSI is at 58.5, indicating balanced momentum, while the MACD is positive with a narrowing histogram, suggesting a potential stall in the daily trend.

Bollinger Bands

The Bollinger Band width expanded significantly midday, reflecting increased volatility. Price traded above the upper band during the early breakout before retreating into the band’s middle line. The closing price at $156.66 is now within the lower half of the Bollinger Bands, indicating a potential return to baseline volatility and a possible pullback toward key support levels.

Volume & Turnover

Volume spiked to a 24-hour high of 180,649.567 SOL at 17:30 ET, confirming the breakout. Turnover exceeded $28.4M during the same period. However, volume dropped sharply after 18:45 ET, coinciding with the reversal phase. Notable divergences occurred between price and volume in the late afternoon, with price falling despite moderate volume, signaling weakening conviction in the downtrend.

Fibonacci Retracements

Applying Fibonacci to the recent 15-minute high of $164.48 and the low at $156.00, the pair closed near the 61.8% retracement level at $160.00. This suggests a potential retest of the 50% level at $159.00 before finding support or resistance at the 38.2% level at $157.30. On the daily chart, key Fibonacci levels from the March 2024 high are still intact, and the 0.786 retracement at $161.00 could act as a pivot in the near term.

Backtest Hypothesis

Given the observed overbought conditions and the clear reversal signals in the RSI and MACD, a backtest using a simple RSI-based strategy could offer insights into potential returns. A standard setup would trigger a long entry when RSI crosses above 70, with an exit after a 3-day holding period. The next RSI crossover above 70 occurred early on Friday, aligning with the breakout observed in the 15-minute chart. Using this strategy on SOLUSDT, with the RSI(14) and a 3-day hold, could help assess the viability of momentum trading in this fast-moving pair. Further testing would benefit from historical RSI data and trade execution details.