- Solana developed a bearish market structure.
- Liquidity above $100 could pick up prices before a reversal.
Solana [SOL] has been stuck in a downward trend for the past month. Prices fell from $126 to $79 on January 23, but a recovery appeared to be underway.
Despite the 23% gain in the past week, the technical structure remained bearish.
In other news, Solana achieved the third-highest NFT sales volume this past week. However, this impressive performance may not guarantee positive price development in the coming days.
Discuss the implications of the recent outbreak
As mentioned earlier, Solana prices have been on a steady downward trend over the past month.
This streak of lower highs and lower lows has not yet been broken, meaning that the market structure on the 12-hour chart was still bearish.
Yet the descending channel (purple) has been broken. This presented a potential buying opportunity, but it was also risky as buyers could be sidelined if a breakout failed.
Source: SOL/USDT on TradingView
The RSI climbed above the neutral 50 level to indicate bullish momentum was in play. Still, the OBV continued to hold on to December highs. The inability to move higher over the past two months was a sign of subdued buying volume.
This supported the idea that SOL was unlikely to climb past the $100 mark anytime soon.
The heatmaps showed where SOL bulls could face rejection
Source: Hyblok
Three major areas of resistance developed during last month’s trading. The first two were the $110 and $104 regions, which saw an estimated liquidation level of more than $2 billion.
The third was the $94.2-$97.2 area.
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During the bounce on January 28, these levels were reached before falling to the $93.5 mark. Given the huge amount of liquidity in the North, a run to the $112-$115 region seemed very likely.
A drop in prices would not result in as many levels of liquidation.
Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
