Solana (SOL) is facing increasing downward pressure as a confluence of bearish indicators suggests a potential breakdown of its current trading range. Sellers appear to be gaining control, and a critical technical signal is on the verge of flashing, raising concerns among investors.
The Moving Average Convergence Divergence (MACD), a widely followed momentum indicator, is inching closer to forming a death cross. This bearish crossover occurs when the MACD line dips below the signal line and is often interpreted by traders as a strong indication of an impending sustained downtrend. As of this report, the MACD line (blue) for SOL is hovering just above the signal line (orange), suggesting that a downward cross, and subsequent sell signal, could materialize with further bearish momentum.
Negative Balance of Power Reinforces Bearish Sentiment
Adding to the negative outlook, Solana’s Balance of Power (BoP) is currently negative at -0.12. The BoP indicator assesses the strength of buying versus selling pressure, and a negative reading signifies that sellers are dominating the market. This reinforces the notion that downward pressure on SOL is intensifying, potentially paving the way for a new phase of decline. Historically, a sustained negative BoP has often preceded significant price corrections.
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Key Support Levels in Focus as Breakdown Risk Increases
With bearish momentum building, Solana is now at risk of breaching a crucial support level at $145.68. A decisive break below this threshold would likely confirm a short-term downtrend and could trigger a deeper sell-off towards the next support level at $142.32. If buyers fail to find significant support at this point, the cryptocurrency could potentially slide further to test the lower support at $133.94.
However, it is important to note that this bearish scenario could be averted if renewed buying interest emerges. Should sufficient demand materialize, Solana could potentially overcome the immediate resistance level at $153.67. Successfully breaching this resistance could then pave the way for a rally towards the $171.50 mark, invalidating the current bearish outlook. Investors will be closely watching key support and resistance levels, as well as the confirmation of the MACD death cross, for further directional cues.
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.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
