Can Solana’s Descent be Stopped? The Answer Lies in a Crucial Price Level!
Solana [SOL] has been moving at a steady pace throughout the month, showing a minor increase of 3.43%, mostly due to trading in a consolidation range. However, recent trading sessions have revealed a more evident struggle, with a meager weekly rise of 0.45% and a daily decline of 2.43%.
While the general expectation in the market is for SOL to continue its downward movement towards the lower boundary of the consolidation range around $128.50, there are additional factors to take into account.
Descending Pattern on SOL Chart
Looking at the Solana chart, there has been a recent reaction to the resistance level within the consolidation range. This range is characterized by fluctuations in price between well-defined support and resistance levels.
Following the bounce off the resistance, the price has been on a downward trend, usually heading towards the support level at $128.50, a trend observed on multiple occasions.
Nevertheless, the emergence of a minor support line within the consolidation range at $136.15 raises the possibility of a potential Solana upswing if there is enough buying pressure to trigger this shift.
Currently, CryptoCrypto has noted mixed reactions in trading behaviors, placing SOL on a somewhat uncertain path regarding whether the support at $136.15 will hold.
Indicators Point to a Possible Downturn for Solana, but the Extent Remains Uncertain
Technical indicators are signaling a continued downward movement for SOL, influenced by a strong bearish sentiment. Notably, the Moving Average Convergence Divergence (MACD) and the Aroon line are indicating a potential decline.
The Aroon indicator, featuring an orange ‘Aroon Up’ line and a blue ‘Aroon Down’ line, gauges the time between highs and lows to evaluate the trend’s strength and direction.
With the Aroon Down line currently higher than the Aroon Up line, the market seems to be in a bearish phase for SOL.
The MACD corroborates this perspective as it trends downward, displaying increasingly negative momentum bars and the blue MACD line crossing below the signal line.
These trends imply that SOL is poised for a decline as trading progresses. The exact depth of the descent remains uncertain; it could stabilize around the nearby support level of $136.15 or potentially drop as far as $128.50, depending on further market dynamics.
On the other hand, CryptoCrypto’s analysis of on-chain metrics shows a growing bullish sentiment among traders, with an uptick in long positions and the maintenance of existing ones.
Reduced Selling Pressure on SOL
Based on on-chain data from Coinglass, the likelihood of further decline in SOL has diminished, and selling pressure is waning as bullish activity gains momentum.
Open interest, tracking unsettled derivative contracts, specifically futures contracts, has climbed by 5.21% to $2.25 billion, indicating a rise in long positions that could drive the price higher.
Simultaneously, the funding rate has turned positive, currently standing at 0.0021%. A positive funding rate suggests that long traders are compensating short traders, anticipating a price increase.
If these bullish signals persist, SOL could be in a strong position for an upturn, with the $136.15 support likely to hold. Conversely, a shift to negative sentiment could result in SOL dropping to the lower support level at $128.50.