Solana: Is a recovery likely for SOL?

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

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

The Solana [SOL] market had a bearish outlook on the price chart since late July. The bulls’ inability to breach the $25 resistance region was followed by a freefall beneath the $22.5 mark over the past week.

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

The price was trading at a higher timeframe area of interest for SOL bulls. If they were to begin the process of driving prices higher, the $20 psychological level was crucial. The indicators showed that sellers were stronger at press time.

The breaker block and Fibonacci level confluence could see SOL sentiment begin to shift

The cyan box at $20.1-$22.2 represented a bullish breaker block from the 1-week timeframe price chart. It had served as resistance in early June but was flipped to support during the rally in July. At press time, Solana was trading within this area. Moreover, the $20 psychological level was also nearby.

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

The RSI showed momentum was bearish in the past week. The OBV formed lower highs since mid-July to show decreasing demand for SOL. This did not bode well for the chances of recovery. The moving averages were on the verge of signaling a downtrend.

The falling trading volume and Open Interest reinforced the bearish sentiment

Source: Santiment

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

The funding rate was negative in the past few days but rose above 0 in recent hours. This does not indicate a shift in sentiment by itself, but it showed bulls might be able to halt the downtrend.

Realistic or not, here’s SOL’s market cap in BTC terms

Source: Coinglass

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

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