Solana’s [SOL] downtrend persisted, with bearish momentum increasing as the price recently dropped below the critical 200-day EMA level.
Confirmation of the downtrend came with the appearance of a death cross, a bearish technical indicator where the 20-day EMA falls below the 200-day EMA. Historically, Solana has experienced prolonged periods of bearish pressure following a death cross.
Currently, SOL is trading at $129, marking a 5% decline over the last 24 hours. The bears have continuously tested the $125-$127 support range for over five months, and a failure to maintain this level could expose SOL to further downside potential.
Bearish Signals Persist for Solana Following a Death Cross
The $125-$127 support range remains crucial for Solana. Should the bears succeed in pushing below this range, the next significant support level is around $117 and could become the target in the event of further declines.
To initiate a possible recovery, bulls need to surpass the 20-day EMA ($135.92), 50-day EMA ($143.15), and 200-day EMA ($139.58).
However, the prevailing bearish sentiment in the market poses a challenge to any upward movement. Additionally, the long-term trendline resistance continues to hinder price increases. SOL would require a substantial breakout above this resistance level to reverse the current trend.
The Relative Strength Index (RSI) remains below equilibrium, reflecting a bearish stance. A quick reversal is not guaranteed as the RSI has yet to reach the oversold territory. To signal a potential bullish rally, the RSI must climb above the neutral 50 level.
Insights from Solana Derivatives Data
According to the latest data from Coinglass, SOL witnessed a 6.17% decline in trading volume, with total volume reaching $5.97B. Despite the bearish conditions, open interest rose slightly by 0.15% to $2.06B, indicating continued trader activity.
The overall long/short ratio for SOL in the past 24 hours stands at 0.9342, reaffirming the bearish sentiment among investors.
Notably, specific divergences were observed in the data. On Binance, the long/short ratio for top trader accounts in the SOL/USDT pair heavily favored long positions at 3.817.
A similar long bias was evident on OKX, with a ratio of 3.35. These figures suggest that some traders anticipate a potential bullish turnaround despite the broader market conditions.
SOL’s price currently teeters on the edge, with the $125-$127 support range serving as a critical level to monitor. A failure to hold this support could lead to a decline towards the next significant support level at $117.
Given the existing market conditions and prevailing bearish sentiment, a short-term bullish reversal for SOL appears improbable unless Bitcoin experiences a sudden surge in buying activity.