During most of this month, Solana [SOL] has been experiencing a gradual movement, registering a minimal increase of 3.43%, mainly attributed to its trading activity within a consolidation zone. However, in the recent trading sessions, the struggle has intensified, with a slight weekly uptick of 0.45% and a daily decrease of 2.43%.
While the general market sentiment anticipates further decline for SOL, potentially reaching the lower boundary of the consolidation zone around $128.50, it’s essential to take into account additional factors.
Drop Scenario in SOL Chart Context
An assessment of the Solana chart indicates a decline pattern currently in effect. Recent price action shows a reaction near the resistance level within the consolidation zone, characterized by price oscillations between established support and resistance levels.
Following the bounce off the resistance, the price trend has been downwards, with an expectation to test the support level at $128.50, a recurring pattern observed in multiple instances.
However, the emergence of a minor support line within the consolidation zone at $136.15 presents an opportunity for a potential Solana upswing, contingent on a surge in buying pressure to drive this shift.
Recent trading activities have displayed varied responses, leaving SOL on an ambiguous trajectory – uncertain whether the $136.15 support level will hold or be breached.
Indicators Pointing Towards a Downturn for Solana, with Uncertainty on Depth
Technical indicators are signaling a potential continued downward trajectory for SOL, propelled by a prevailing bearish sentiment. Notably, indicators like the Moving Average Convergence Divergence (MACD) and the Aroon line indicate this impending downturn.
The Aroon indicator features an orange ‘Aroon Up’ line and a blue ‘Aroon Down’ line, assessing the strength and direction of a trend by tracking the duration between highs and lows.
With the Aroon Down line surpassing the Aroon Up line currently, the market sentiment leans bearish for SOL.
Further reinforcing this outlook is the MACD, which displays a downward trend accompanied by increasingly negative momentum bars, as well as the blue MACD line crossing below the signal line.
These indicators suggest a forthcoming drop in SOL as trading progresses. The exact depth of this decline remains uncertain, with stabilization near the nearby $136.15 support level or a potential dip to $128.50 contingent on further market dynamics.
Notably, on-chain metrics observed by CryptoCrypto hint towards a growing bullish sentiment among traders, with an increase in long positions and the maintenance of existing ones.
Relief from Selling Pressure on SOL
Based on on-chain data from Coinglass, the likelihood of SOL experiencing further decline has diminished, coupled with a reduction in selling pressure as bullish sentiment gains momentum.
The open interest, tracking unsettled derivative contracts—specifically futures contracts in this context—has risen by 5.21% to $2.25 billion. This indicates a surge in long positions that may influence a price advance.
Simultaneously, the funding rate has turned positive, standing at 0.0021%. A positive funding rate signifies that long traders are compensating short traders, expecting an impending price surge.
If these bullish signals persist, SOL could be primed for a significant rally, supported by the probable retention of the nearest support at $136.15. Conversely, a negative turn could see SOL descending towards the lower support level at $128.50.