Key Points:
- Downtrend since early August; bearish indicators.
- NFT sales surge despite crypto-wide decline.
- Bulls’ challenge: defending $20 for a bullish shift.
Analyzing the 1-day chart, it becomes evident that the market structure of Solana has been consistently bearish since the beginning of August, with SOL caught in a downtrend. This negative trend is further supported by both the simple moving averages and the RSI, emphasizing the prevailing bearish momentum.
During mid-August, Solana (SOL) encountered a substantial wave of selling pressure. This pessimistic sentiment extended beyond Solana to impact the broader cryptocurrency landscape, leading to a widespread decline in prices. Despite the strong performance of its NFT space, as evidenced by a recent report detailing an increase in sales volume, the overall sentiment reflected on the price chart leaned towards the bearish side.
SOL’s trading activity remained confined within a region of interest on a larger timeframe. The defense of the $20 threshold by the bulls assumes a critical role in the potential shift of the market structure to a more bullish stance on shorter timeframes, contingent on a breakthrough beyond $22.
In the event that the price dips below $20.2, there’s a possibility that SOL could experience a descent towards $17.
The price range spanning $20.26 to $22.3 is visually highlighted in cyan to signify a significant bullish barrier on the 1-week timeframe. Aligning with the observations on the 1-day chart, the market structure has been consistently bearish since early August, firmly establishing SOL’s downtrend. This notion is further reinforced by the interplay of simple moving averages and the RSI, both indicating the presence of bearish momentum.
On the daily chart, the Directional Movement Index (DMI) illustrates a robust downward trend, with both the -DI (red) and ADX (yellow) surpassing the 20 mark. This serves to confirm the conclusions drawn from the price chart. The On-Balance Volume (OBV) has experienced a gradual decline over the past fortnight, further corroborating the prevailing bearish sentiment.
The application of Fibonacci retracement levels (pale yellow) underscores potential support at the 61.8% and 78.6% levels, corresponding to $20.18 and $16.94, respectively. However, a daily close below $20.26 would breach the weekly bullish barrier, indicating a bearish inclination. This scenario suggests a likely descent towards $16.94 in the upcoming weeks.
Within the last 24 hours, bearish sentiment regained control.
On August 25 and 26, Solana’s bulls successfully defended the $20.2 support level, leading to a brief recovery that peaked at $20.92. This momentary rebound coincided with a surge in Open Interest (OI), though this rally was short-lived. The subsequent decline in OI, coupled with declining prices, underlines the bearish sentiment and discourages near-term long positions.
In contrast to this perspective, the spot Cumulative Volume Delta (CVD) has exhibited a gradual and consistent uptrend since August 18. Despite periods of substantial selling, there are indications of emerging demand. This resurgence of demand fosters optimistic expectations of a potential recovery.
In the short term, there is potential for a rebound towards $20.9 and $22, painting a bullish scenario. However, traders and investors must remain prepared for the possibility of a bearish outcome as well.
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