Short the Bounce: Fading SOL’s Dead-Cat Rally into 122–123 for a Flush Toward 116

Comprehensive multi-timeframe technical review and 24h game plan for SOL/USD

1. Market structure and trend context (Daily/4H/1H)

• Daily structure: Persistent series of lower highs and lower lows since the early-October breakdown. After the Nov 30–Dec 4 relief rally to ~145, price rolled over and has now made fresh period lows in the 117–119 zone. Trend is decisively bearish on the daily timeframe.
• 4H structure: Clean downtrend channel since Dec 3 high (~145). Today extended to a new low and closed near the lower end of the channel, then minor bounce. Lower highs: 145 → 140 → 136 → 133 → 129 → 128, lower lows culminating at 117.5. Bearish continuation bias.
• 1H structure (intraday 12/18): Morning grind from 123–124 into a stop-run spike to 126.6–128.8, then sharp selloff to 117.5 with heavy volume. Subsequent bounce to ~119–120. Price is sitting below the prior breakdown area (122–124), suggesting supply overhead and likely retest before continuation lower.

2. Key levels (confluence of S/R, prior pivots, fibs, round numbers)

• Resistance/sell zones:
  • 121.6–123.2: 38.2–50% retrace of today’s 128.76 → 117.46 leg, prior intraday support turned resistance, and near session VWAP cluster.
  • 124.6: 61.8% retrace and top of the initial breakdown shelf; above here squeezes can reach 125.8–126.8.
  • 128.7: Session high and breakdown apex; would be a trend-changing area if reclaimed with acceptance.
• Supports/targets:
  • 117.5–117.8: Today’s intraday low cluster. First demand test; a break opens 116.0–115.3.
  • 116.0–115.3: Measured move zone (see section 7) and round-number magnet; likely where shorts cover into first extension.
  • 112–113: Secondary downside if momentum accelerates (stretch target outside 24h base case).

3. Momentum and oscillators

• Daily RSI: Likely ~30–33 (oversold region) after a multi-week decline. Oversold can persist in strong downtrends; risk of short-term bounces, but trend remains down.
• 4H RSI/MACD: RSI oversold but stabilizing; MACD below zero with widening negative histogram earlier, now flattening—typical of a pause/bounce inside a downtrend.
• 1H RSI: Mild bullish divergence between the 19:00 and 20:00 UTC lows (price lower, momentum less weak), consistent with a corrective bounce into 121.5–123 before trend resumption.
• Stochastics (1H/4H): Crosses up from oversold; in the context of a bearish trend, these typically produce countertrend rallies into resistance; we’ll use that to locate a short entry.

4. Moving averages and trend filters

• Daily 20SMA ≈ mid-130s; price is far below and riding the lower side—bearish impulse intact.
• Daily 50SMA likely ~150–160 and 200SMA higher; steep negative separation—macro trend down.
• 4H/1H EMAs: Price below the 20/50 EMAs on both; rallies into the 1H 20/50EMA band (≈121.5–123.0) tend to fail. Ideal sell on a retest of that band.

5. Volatility and bands

• Daily ATR(14) estimated ~8–10; today’s intraday range (~11.3) signals expanded volatility consistent with trend continuation.
• Bollinger Bands (Daily): Price has pushed/breached the lower band; bands expanding downward—trend mode. Expect brief mean reversion toward the 20D basis (mid-130s) to be sold. Near term, a tag back toward 121–123 (lower/timeframe bands on 1H) is probable before another leg lower.

6. Ichimoku (trend + mean reversion cues)

• Daily and 4H: Price is well below the cloud; Kijun significantly above current price, showing strong bearish imbalance (TK disequilibrium). Typical behavior: short-term pullback toward Tenkan/Kijun on 1H/4H, then continuation lower. This supports a short entry on a bounce into 121.5–123.5 with a stop above 125–126.

7. Price patterns and measured moves

• Intraday waterfall: 128.8 → 117.5 impulse of ~11.3. A 38.2–61.8% pullback projects to 121.6–124.6 (sell zone). A symmetric follow-through (measured move) from a 122–123 retest points to 116–115.3.
• Bear flag logic (4H): Repeated flag breakdowns over the past week have met their measured targets. Today’s bounce is likely a flag retest, not a reversal.

8. Volume profile and tape considerations

• Highest volumes today occurred during the selloff (19:00–21:00 UTC), confirming aggressive supply.
• The 13:00 UTC thrust to 126.6–128.8 was swiftly faded with heavier sell pressure—a classic distribution signature.
• Expect a liquidity hunt into 122–123 where trapped longs reside; sellers should reassert there.

9. Fibonacci mapping (latest swing)

• Swing high 128.76 to low 117.46:
  • 38.2% = ~121.6
  • 50% = ~123.1
  • 61.8% = ~124.6
• This aligns tightly with prior intraday support-turned-resistance, enhancing the 122–124.5 sell window confluence.

10. Elliott wave framing (tactical)

• From Dec 3 top (~145), the decline counts as: Wave 1 down → Wave 2 failed rally → extended Wave 3 down into the 120s. Now a Wave 4 intraday retrace toward 122–124 is likely, followed by Wave 5 termination into 116–115 to complete the sequence. That sequencing matches the measured-move and fib confluences.

11. VWAP and session structure

• Today’s developing VWAP likely sits above current price near ~123, given the earlier high prints and heavier volume during mid-session. Retests of VWAP and 1H EMA cluster often provide high-quality fade entries in trend days.

12. Risk management, invalidation, and scenarios (next 24h)

• Base case (≈60%): Bounce to 121.6–123.3 (possibly as high as 124.6 on a wick), then continuation lower to take out 117.5 and probe 116.0–115.3. Close near 116.5–118.5.
• Secondary (≈25%): Deeper squeeze toward 124.6–126.2 (61.8% + prior shelf). If price accepts above ~126.2 on strong volume, shorts are at risk of a run to 128.0–128.8.
• Low probability reversal (≈15%): Reclaim and hold above 128.8 (today’s high). That would disrupt the downtrend and force reassessment (potential trend transition to balance/up).
• Invalidation for the short idea: 1H close and acceptance above ~126.2; daily close back above ~128 negates the immediate bearish continuation.

13. Trade plan synthesis

• Bias: Sell bounces within 121.6–123.3 (ideal entry around the 50% retrace/1H VWAP confluence ~122.8–123.1). If liquidity grabs push to 124.6, it’s a second-chance tier with tighter oversight.
• Target: 116.9 initial take-profit to capture the break of 117.5 with some front-running. Stretch cover 115.5–116.0 if momentum accelerates.
• Protective stop (for planning): 126.2 (above 61.8% and above the local breakdown shelf), yielding a favorable reward:risk from ~122.9 entry.
• Position sizing: Risk 0.5–1.5% account on the stop distance; scale in 50% at 122.5–123.0, 50% at 124.4–124.7 if reached, average ~123.8, blended stop 126.6, blended TP 116.9–116.0.

14. Time and execution notes

• With current price ~119.37 (near session lows), entry patience is key. Let price rotate back to the 121.6–123.1 zone using limit/laddered orders. If price fails to bounce and instead breaks 117.5 directly, consider a momentum add-on only on a clean breakdown and retest failure of 117.5 (avoid chasing if volatility spikes).

15. Macro/correlation watch

• Crypto beta: If BTC/ETH bounce modestly, expect SOL to retrace into the sell zone before continuation. If BTC makes fresh lows, SOL can front-run to 116 without offering the ideal bounce—plan accordingly with a conditional breakdown add.

Conclusion and 24h outlook

• Direction: Bearish continuation after a corrective bounce. Expect a retest of 121.6–123.1, then a push toward 116–117. A sustained reclaim above 126.2 would invalidate the short in the next 24h.

Actionable call

• Decision: Sell (Short Position)
• Optimal open: 122.9 (limit sell in the 122.5–123.1 pocket; 122.9 is the midpoint of confluence and aligns with 50% retrace.)
• Profit target: 116.9 (front-run the 117.5 low; captures measured continuation)
• Protective stop (in analysis only): 126.2 (above 61.8% and breakdown shelf) for an indicative R:R ~1.7–2.0 depending on fill.