In the past six weeks, Solana [SOL] has been experiencing a period of correction following its rejection above the $260 mark. Despite a notable level of social interest in the asset, there has been a worrisome decline in active addresses. Recently, Pumpfun transferred $21 million worth of SOL to the centralized exchange Kraken, causing concerns about potential short-term selling pressure.
An analysis of its MVRV ratio has indicated a potential opportunity for buying. Simultaneously, the price has been trading slightly above a support zone that previously acted as a significant resistance in mid-2024.
Solana Shows Bearish Trends in Daily Trading
The general market downturn observed in recent weeks, following the November surge, has had a negative impact on SOL. Despite Bitcoin [BTC] falling to $89.2k on January 13, it was notable that Solana managed to sustain the $180 support level.
The On-Balance Volume (OBV) has been consistently decreasing since November, even with determined buying activity. This downward trend suggests that the support zone might be breached unless overall market sentiment shifts towards a bullish direction.
Technical indicators such as the 20 and 50-period moving averages have signaled potential reversal points. Currently, these indicators reflect a bearish momentum, with the slower moving average acting as a short-term barrier.
Price action aligns with this narrative, indicating that for a bullish reversal, SOL needs to surpass the recent lower high of $218.2 set just over a week ago.
Short-Term Outlook Remains Bearish
An analysis of the hourly chart by Coinalyze also suggests doubts about Solana’s short-term bullish prospects. Although there was a bounce in price from $170 in the last 24 hours, the increase in Open Interest was insufficient to alter the overall sentiment, reflecting mostly neutral sentiment and speculative inactivity.
This cautious sentiment is also reflected in the spot Cumulative Volume Delta (CVD) indicator, which has been forming lower highs over the past week. A reversal in this trend would indicate a resurgence in buyer dominance.
Disclaimer: The information shared is opinion-based and should not be considered as financial advice, investment recommendations, or trading guidance.