Over the past fortnight, the bullish trend of Solana [SOL] has been prevailing, leading to expectations of downward pressure amongst traders earlier this week. This anticipation resulted in an increase in short positions and subsequent liquidations as sellers anticipated a decline.
Within the last five days, SOL has encountered a rise in selling pressure. Despite a two-week rally, there is a growing urge to secure profits, intensifying the pressure. Consequently, there has been a notable uptick in short positions.
On-chain data from Coinglass reported liquidations of short positions worth over $7 million in the past 24 hours. The data also indicated that short positions outweighed long positions significantly, accounting for 64.54% during the same period.
The SOL long/short ratio plummeted from 1.05 on September 20th to 0.95, but has rebounded to 1.1 within the last 22 hours.
The decrease in the SOL long/short ratio since October 20th indicates a surge in short positions in comparison to long ones, which was an anticipated outcome for various reasons.
Since October 20th, several leading coins have succumbed to selling pressure, experiencing subsequent pullbacks. Additionally, SOL retested a resistance level around the same period.
Solana Targeting the Next Resistance Area Amid Bullish Dominance
The resistance threshold between $161 and $163 was breached by SOL, which continued its upward momentum. The surge in short liquidations took place beyond this resistance zone.
Presently, the price of SOL has reached $174, marking an overbought condition according to the RSI indicators.
While the overbought status signals a likelihood of increased selling pressure, there might still be potential for further upside in the upcoming days. The next resistance level for SOL stands at $185.
The unexpected price surge of SOL led to a short squeeze scenario, particularly amidst the surge in open interest seen this week.
Within the last 24 hours, open interest surged to $3.26 billion, hitting a level not witnessed since the beginning of April.
The upward momentum of SOL confirms a breakout, potentially enticing more traders to adopt long positions. However, this also highlights a possible shift towards long liquidations once the sweep of short positions is finalized.