Solana: Deciphering the aftermath of SOL’s recent skill loss


The Solana (SOL) bull had to face another liquidation after an extensive market sell-off over the past two days. Heading south, SOL fell towards its $35 baseline for the first time in nine months. As Alt enters its narrow phase, the next few candles will be important in determining a breakout rally from either side.

A slide below the immediate trendline support (white, dashed line) could propel further retracements before the necessary recovery occurs. At press time, SOL is trading at $44.62, down a whopping 30% in the last 24 hours.

SOL-4 hour chart

Source: TradingView, SOL/USD

At the 5-month trendline resistance (white), the devaluation of the SOL has settled bearish, down 48.7% over the past three days. With massive selling pressure, the alt depreciated between the borders of a falling wedge towards its 9-month low on May 12th.

As Fibonacci resistance held up well, sellers spurred a sales craze, promptly curtailing revival rallies. Naturally, the price action continued to test the lower band of the Bollinger Bands (BB) as prices surged towards the ‘cheap’ side. To compensate, the recent bearish candlesticks are supported by high volume.

If the bulls finally find evidence and trigger a buy rally, the SOL could break the upper bound of the existing bearish wedge. A break above the pattern could lead the alt to test the 23.6% Fibonacci level before falling into a bearish trend.

rationale

Capture 27 scaled

Source: TradingView, SOL/USD

Based on the RSI’s oversold position, the SOL could revive if buyers stick to immediate grounds. At press time, the index was slightly higher after a strong diverging with the price over the past two days.

Similarly, the higher lows of the CMF indicated a bullish divergence from the price of the past day. The oscillator hasn’t crossed the -0.14 line yet, but the base pressure seems to have risen.

conclusion

Continued selling pressure may be alleviated by: Bullish divergence with technical indicators. Also, a falling wedge along with the oversold figure at BB increases the likelihood of a reversal.

However, a break below the lower trendline of the wedge could extend the liquidation phase. Finally, keeping an eye on Bitcoin’s movements is critical to making an informed currency.

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