Following a recent downturn in the broader market, Solana (SOL) has reached a critical point in its trading pattern known as an inverted Head and Shoulder formation. Presently, SOL is in the process of retesting this level after breaking out on the charts.
Market Sentiments
The prevailing market sentiment appears to be uncertain amidst signs of a slight recovery following a notable decline. Some view the recent dip as a necessary correction phase, while others attribute it to general uncertainty stemming from factors such as upcoming U.S. elections and geopolitical tensions.
Analysis of Solana’s Price Movement and Significant Levels
Notwithstanding these external factors, SOL’s technical analysis indicates a positive outlook, hinting at a potential upward momentum in the days ahead.
According to CryptoCrypto’s analysis, SOL is currently hovering around a crucial support level of $161, showcasing a price reversal on the four-hour chart.
If SOL manages to close a daily candle above $167, historical trends suggest a strong likelihood of the asset surging to $195 or beyond.
Presently, SOL displays bullish tendencies, trading above the 200 Exponential Moving Average (EMA) on both the four-hour and daily charts.
Furthermore, the Relative Strength Index (RSI) points towards a probable uptrend soon, with the indicator currently in oversold territory.
Positive On-Chain Metrics
On-chain metrics provide additional support for SOL’s optimistic trajectory. Coinglass’s data indicates a Long/Short ratio of 1.02, the highest since the market downturn began, signaling bullish sentiment among traders.
However, SOL’s Open Interest has decreased by 7% over the past 24 hours, suggesting that traders have liquidated some positions following the recent price drop, possibly showing reluctance to enter new positions at this stage.
Significant Liquidation Levels
Currently, key liquidation thresholds are identified at $156.7 on the downside and $166.5 on the upside, indicating potential over-leveraging among traders at these points.
If the market sentiment remains positive and prices climb to $166.5, approximately $57.6 million worth of short positions could be liquidated. Conversely, a shift in sentiment causing prices to drop to $156.7 may lead to the liquidation of around $120 million worth of long positions.
Combining these on-chain metrics with technical analysis suggests that bulls are currently in control of SOL. In summary, a significant price rally could be on the horizon for SOL in the near future.