Solana: Is recovery likely for SOL?

Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.

• The confluence of the Fib level and the bullish breaker was something to watch out for.
• This does not guarantee a recovery for Solana as the bulls have been weak recently.

The Solana [SOL] market had a bearish outlook on the price chart since the end of July. The bulls’ inability to break through the USD 25 resistance region was followed last week by a free fall below the USD 22.5 mark.

How much are 1, 10 or 100 SOL worth today?

Price was trading on a higher time frame that mattered to SOL bulls. If they were to begin the process of higher prices, the psychological level of $20 was crucial. The indicators showed that sellers were stronger at the time of going to press.

Breaker block and Fibonacci level confluence could start to shift SOL sentiment

Source: SOL/USDT on TradingView

The cyan box at $20.1-$22.2 represented a bullish breaker block from the 1 week price chart. It had served as resistance in early June, but was turned to support at the July rally. At the time of writing, Solana traded in this area. In addition, the psychological level of $20 was also close.

The market structure on the 1-day chart above was bearish. This came after SOL reached a lower high at $25.68 and a low at $22.23 on August 5. The two weeks since then showed the development of a downtrend based on the structure.

The RSI showed that momentum was bearish over the past week. The OBV has been reaching lower highs since mid-July to show declining demand for SOL. This did not bode well for the chances of recovery. The moving averages were about to signal a downward trend.

Declining trading volume and Open Interest strengthened bearish sentiment

Source: Sanitation

Santiment data showed that trading volume has reached lower highs since June. This was accompanied by steadily falling prices. It showed that traders and speculators preferred to sit on the sidelines in the Solana market, possibly in anticipation of a strong uptrend.

The coverage ratio has been negative for the past few days but has risen above 0 in the past few hours. This does not in itself indicate a shift in sentiment, but it did show that bulls could halt the downtrend.

Realistic or not, here is the market cap of SOL in BTC terms

Source: Mint glass

On the other hand, Open Interest noted that bearish sentiment prevailed in the market. The drop in OI over the past ten days has been significant and has not reversed the downtrend, even though SOL had long-term support.

Therefore, a drop below the $20 support cannot yet be ruled out. Bulls should be prepared to exit the market in such a scenario. If SOL were able to climb back above $22.5 and retest it as support, recovery would become more likely.