Solana [SOL] has been navigating rough waters lately, trading within a higher timeframe bear pennant—a pattern that has analysts predicting continued price consolidation over the next four to six weeks. This outlook appears to be unfolding as SOL inches closer to its range lows, sparking concern among traders and investors.
Bearish Signals Dominate Solana’s Chart
Since August 25th, Solana has experienced a sharp decline of 21.7%, pulling back from its recent highs. As of Monday, SOL showed a modest recovery, gaining 2.58%, but the overall picture remains bleak. The On-Balance Volume (OBV), a critical indicator of buying and selling pressure, has been steadily declining over the past ten days, highlighting a market dominated by sellers. The OBV’s downward trend is particularly troubling, signaling that the bulls lack the strength to mount a significant recovery.
Adding to the bearish sentiment, the Relative Strength Index (RSI) on the daily chart stands at 38, well below the neutral 50 mark. This level suggests that downward momentum is currently superior, making it difficult for SOL to break free from its bearish grip.
Key Levels to Watch – Will Solana Find Support?
Solana is once again approaching a crucial Fibonacci retracement level, with the range from $122 to $187 still in play. Despite the recent downturn, the range lows have not yet been breached, offering a glimmer of hope for a potential bounce. A revisit to the $120 region could present a buying opportunity for those looking to capitalize on a short-term price rebound. However, caution is advised—there’s a real possibility that a deeper price correction is on the horizon.
Bitcoin’s Influence- A Double-Edged Sword?
A potential wildcard in Solana’s near-term future is Bitcoin [BTC]. A Bitcoin liquidity run is anticipated in the short term, which could provide some much-needed support for SOL bulls. Liquidation levels to the north at $140 and $150 could act as magnetic zones, drawing Solana’s price higher if Bitcoin gains momentum.
Also Read: Solana Surges 7,500%, Defying Market Slump: Weekly Inflows Hit $7.6 Million
However, this scenario is far from guaranteed. On the flip side, a cluster of liquidation levels is forming around $126, indicating that Solana could face more volatility and another dip to this level or even lower. If bearish sentiment continues to dominate the broader market, SOL may struggle to maintain its current price levels.
Solana’s current position is precarious, with bearish indicators dominating the charts. While a short-term price bounce is possible, particularly if Bitcoin rallies, traders should remain cautious. The coming weeks could see increased volatility and the potential for further downside if market conditions don’t improve. For now, Solana remains in a wait-and-see phase, with both bulls and bears eyeing the next move.
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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