Solana (SOL) is currently experiencing a significant decline, with the price down over 17% and reaching the critical support level at $118. This sharp downturn has put significant pressure on this key level, raising concerns among traders and investors about the possibility of a further collapse. The $118 level has historically been a stronghold for the cryptocurrency, but with the current bearish sentiment in the market, its fortunes are still being determined.
Using key technical indicatorsthis article will provide an in-depth analysis of Solana’s current price action, assess the probability of breaking the $118 support, and explore potential scenarios for SOL.
At the time of writing, Solana is down 17%, trading at around $119.78 over the past 24 hours. Solana boasts a market capitalization of over $54 billion, showing a decline of 18.45%, and a trading volume of over $9.4 billion, indicating an increase of 182.21% in the last 24 hours.
Technical analysis: indicators pointing to a possible breakthrough for Solana
On the 4-hour chart, Solana has shown significant bearishness momentum, with the price falling below the 100-day Simple Moving Average (SMA) and currently trying to make a break below the $118 support level. A successful break below this key level could lead to further bearish move for the cryptocurrency.
The Relative Strength Index (RSI) on the 4-hour chart has fallen to 24.74%, which is considered an oversold zone. This position of the RSI indicator indicates that SOL could extend its bearish move above $118.
On the 1-day chart, Solana has faced increased selling pressure as price has consistently formed bearish candlesticks. Specifically, this pattern shows that sellers are gaining control of the market, driving the price lower with each successive trading session.
Furthermore, the formation of these bearish candlesticks, characterized by closing prices lower than their opening price, reflects a pattern of persistent selling, which is often a sign of underlying weakness in the asset.
Finally, the 1-day RSI has also fallen below 50%, further supporting the possibility of further price decline. This decline suggests that bearish pressure is increasing as sellers are still active and influential in the market market. The fact that sellers are still active implies that Solana will likely continue to decline.
Potential Scenarios: What Happens If $118 Fails?
If Solana can maintain its current bearish momentum and close below the $118 support level, it could continue falling to challenge the $99.44 support level. If this level is breached, the digital asset could experience further price losses towards the $79.24 support range and possibly other ranges below.
Conversely, if the price of SOL were to close above the $118 support level, it will start to rise again towards the $160 resistance point. After breaking above this level, the price of the crypto asset may rise further to deserve to challenge the $170 resistance level and perhaps other levels above.
Featured image from Adobe Stock, chart from Tradingview.com