The recent market downturn has driven Solana (SOL) to break out of its inverted head and shoulders price pattern. At the time of writing, SOL appears to have broken through this level on the chart and is now retesting it.
More information Crypto Buns
Bullish On-Chain Indicators
On-chain indicators further support the positive outlook for SOL. According to data from on-chain analytics firm Coinglass, the long/short ratio for SOL stood at 1.02 as of the time of writing, the highest level since the market started declining. A ratio above 1 indicates a bullish sentiment among traders.
However, SOL's open interest has declined by 7% in the past 24 hours, suggesting that traders have been closing positions due to the recent price drop. Additionally, traders may be unwilling to establish new positions at this time.
Key Liquidation Levels
Currently, the key liquidation levels are at $156.7 on the downside and $166.5 on the upside, where traders have high leverage.
If the market sentiment remains bullish and the price rises to the $166.5 level, short positions worth around $57.6 million will be liquidated. Conversely, if the market sentiment changes and the price drops to the $156.7 level, long positions worth around $120 million will be liquidated.
Combining these on-chain indicators with technical analysis, it appears that the bulls have been dominating this asset. In short, the short-term price of SOL may see a significant upside.
Solana at a Critical Level
However, the current market sentiment is not certain. Especially in the context of a slight recovery after a significant market decline. Some believe the aforementioned depreciation is a correction phase. Others, however, argue that the market decline is due to the general uncertainty caused by the upcoming US elections, geopolitical tensions, and other factors.
Nevertheless, despite these factors, the technical analysis of SOL suggests a positive outlook, hinting at a potential upside in the coming days, as SOL is currently at a critical support level of $160. It has recorded a price reversal within the four-hour timeframe.
Based on the recent price action and historical momentum of Altcoins, if SOL's daily closing price is above $167, the asset is likely to surge to $195 or even higher.
Currently, SOL is exhibiting a bullish performance, as its trading price is above the 200 Exponential Moving Average (EMA) in both the four-hour and daily timeframes.
At the same time, its Relative Strength Index (RSI) suggests a potential upward rebound in the coming days, although it is in the oversold region.
Solana Price Analysis
Solana price is struggling to break above the $180 resistance level and has started a new downside correction, similar to Bitcoin and Ethereum. It has broken below the $175 and $172 support levels.
The bears even pushed the price below $165 and tested the $155 support area. The low was formed at $155, and the price is currently consolidating the losses, trading below the 23.6% Fibonacci retracement level of the downward move from the $173 swing high to the $155 low.
However, the current on-chain indicators and technical analysis for SOL suggest that the bulls have been dominating the asset, with the current trading price below $162 and the 100-hour Simple Moving Average. On the upside, the price faces resistance near $162. A key bearish trend line has also formed on the SOL/USD hourly chart, with resistance at $162.
The major resistance level could be $165, which is the 50% Fibonacci retracement level of the downward move from the $173 swing high to the $155 low. A successful close above the $165 resistance level could lay the foundation for a steady upward move. The next key resistance level is $172. If the price continues to rise, it may challenge $180.
That's it for the article. If you're interested, you can follow along. Additionally, I'll be doing more detailed analysis in the discussion group. If you'd like to join my circle, feel free to chat with me privately or follow my page! Welcome to join us and together we can seize the next hot spot and maximize our investment returns.
