Solana’s recent price action has been quite the rollercoaster. After falling below the critical $172 level, it found some support near its 20-day EMA. This drop was triggered by a pattern break, which saw the bears re-enter the market and push SOL into a downtrend over the past few days.
Previously, Solana had been overbought, leading to a well-anticipated reversal from the $186 resistance level—a point the bears have fiercely defended for over three months. As of now, SOL is trading at $164.
Will Solana Bulls Make a Comeback?
In early July, after rebounding from the $131 support level, SOL bulls briefly took control, sparking a series of green candles on the daily chart. During this period, the altcoin formed a classic ascending channel pattern, achieving an impressive ROI of nearly 45% in just over three weeks.
However, the bears made their move at the $186 resistance level, leading to an anticipated downtrend. This resulted in a patterned breakout, causing SOL to fall below the 20-day EMA. This downtrend has pushed SOL into a relatively low liquidity zone, suggesting that traders should brace for high volatility in the coming days.
What’s Next for SOL?
The altcoin is likely to retest the $154 support level before any potential bullish reversal. If this happens, SOL could aim to retest the $172-$173 range. However, if the bears maintain their pressure, a decline below the $154 support could delay any immediate recovery prospects, with the bears potentially targeting the $142-$145 range in the coming days.
The RSI has dipped below 50, indicating a slight bearish edge. A sustained trajectory below this level would confirm an ease in selling pressure. Additionally, the MACD lines have seen a bearish cross, signaling a decrease in buying pressure. Buyers should look for a close below zero before considering short positions on this popular altcoin.
Derivatives Data Insights
Derivatives data reveals a bearish sentiment in the Solana market, with more traders taking short positions and a notable reduction in Open Interest. While high trading volume might indicate active trading, liquidation data shows that many long traders were liquidated due to the price drop. Despite this, it’s worth noting that the long/short ratios on major exchanges still favor long positions.
Final Thoughts
Before making any buying decisions, buyers should consider Bitcoin’s movements and the broader market sentiment. This holistic approach will provide a clearer picture of the market dynamics and help in making informed trading decisions.
