Solana (SOL) has enjoyed a price surge in the past week, but a key technical indicator suggests this uptrend may be losing steam. The Chaikin Money Flow (CMF) on SOL’s one-day chart has declined, forming a bearish divergence despite rising prices.
Bearish Divergence Signals Weakening Momentum
The CMF indicator, which measures the strength of buying and selling pressure, ranges between -1 and +1. Positive values indicate strong buying activity, while negative values signal selling pressure. A bearish divergence occurs when an asset’s price climbs while the CMF declines, indicating that capital inflows are weakening and the rally lacks strong buyer support.
This divergence raises concerns about the sustainability of Solana’s price surge. If buyers fail to maintain control, the asset may struggle to sustain its current momentum.
Derivatives Traders Bet Against SOL
Adding to bearish concerns, Solana’s long/short ratio currently stands at 0.97, indicating a stronger demand for short positions among derivatives traders. A ratio below 1 means that more traders are betting on price declines than increases.
This bearish sentiment in the derivatives market suggests that traders anticipate a near-term correction, potentially putting additional downward pressure on SOL’s price.
Crucial Support and Resistance Levels
At the time of writing, SOL is trading at $139.41, sitting above key support at $136.92. If selling pressure intensifies, this support level could be tested. A break below $136.92 could see the price decline further to $130.82, reinforcing the bearish outlook.
On the flip side, if actual demand for SOL resurfaces and buying momentum strengthens, the bearish divergence could be invalidated. In that scenario, SOL could push higher toward the $152.87 resistance level.
Also Read: Solana Price Rebounds 5.87% – Can SOL Break Past $140 or Face a Pullback?
Solana finds itself at a critical juncture, with technical indicators hinting at a potential downturn. Traders should watch key support levels closely, as a break below could signal further downside. However, a resurgence in buying pressure could help SOL reclaim bullish momentum, making the next few days crucial for the asset’s trajectory.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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