Solana Surges 6% Off Lows — Relief Rally or Bull Trap? -2025 12 19

Solana traders just witnessed one of the sharpest reversals in weeks. After testing the critical 117.53 support zone early Friday—the lowest level since late November—SOL exploded 8.7% intraday to 127.84 before settling at 126.98. This marks a stunning +6.2% daily gain that caught most bears off guard, ourselves included.

Twenty-four hours ago, our analysis projected continued consolidation between 119-125 with a 55% base case probability, assigned only 10% odds to the bullish 123-129 scenario, and warned of potential breakdown to 115. The market had other plans. The extreme weekly Stochastic RSI reading of 0.75—essentially zero, the lowest mathematically possible level—proved to be the coiled spring everyone underestimated. When price held above the 117-118 zone and 2-hour MACD flipped bullish positive for the first time in days, short covering accelerated violently.

Comparing today’s structure to yesterday reveals the magnitude of this technical shift. The 2-hour RSI rocketed from 38 (oversold) to 57 (neutral), a 19-point surge. More importantly, the 2-hour Stochastic RSI went from 15.83 to 100.00—a move from deep oversold to maximum overbought in one session. That’s not normal price discovery; that’s short-squeeze mechanics. The 2-hour CMF, which sat at -0.39 (strong distribution) yesterday, has recovered to -0.01 (neutral), signaling the selling pressure has evaporated, at least temporarily.

Yet before bulls declare victory, context matters. SOL remains below every major moving average on daily and weekly charts. The daily MA#1 sits 18.36 points overhead at 145.30. Weekly structure is still deeply bearish with price 32.71 points below the weekly MA#1 at 159.66. The aggregate technical score improved dramatically—from -25.0/30.0 (-83% bearish) yesterday to -8.5/30.0 (-28% bearish) today—but that’s improvement within a bear market, not confirmation of reversal.

The immediate challenge is clear: Solana now faces a resistance gauntlet at 127.58-127.63 (the 2H and 4H MA#1 cluster), followed by 130.56 (2H MA#4), then the critical 134.29 (12H MA#1). The 2-hour and 4-hour Stochastic RSI readings of 97-100 scream exhaustion risk. Historically, when short-term oscillators hit these extremes, consolidation or pullback follows within 12-24 hours. The base case for the next 48 hours assigns 55% probability to range-bound action between 122-128 as the market digests this explosive move.

For traders, the playbook is tactical not strategic. This is a relief rally within a downtrend, not a structural reversal. Short-term bulls can target 128-130 with tight stops below 125. Bears should wait for rejection at resistance—ideal short entries sit at 127.50-128.50 targeting a retest of 123-125 support. The weekly floor at 116.72 remains the line in the sand; break below and 110-115 opens up. Reclaim 134 with volume, and we reassess.

Bottom line: Yesterday’s call missed the timing and magnitude of this bounce—a humbling reminder that extreme oversold conditions on weekly timeframes demand respect even when all other indicators scream bearish. The trade now isn’t about calling the bottom; it’s about managing the bounce. Respect the resistance, respect the overbought readings, and don’t let one green candle erase weeks of structural damage.

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