Solana (SOL) At Risk of Fresh Bearish Wave, Traders Turn Cautious

Overview

Solana has recently faced challenges in maintaining its price levels, leading to a notable correction. Following a failure to exceed a significant price threshold, Solana’s price has dipped below critical support levels, prompting caution among traders.

Price Correction and Current Status

The price of Solana (SOL) struggled to remain above $126 and has since corrected its gains. Currently, SOL is trading below $125 and may find support around the $120 level. This downward movement follows a broader trend affecting major cryptocurrencies, including Bitcoin and Ethereum. The price entered a bearish zone after dipping below both $126 and $125, indicating a shift in market sentiment.

A bearish trend line has formed with resistance at $124 on the hourly chart of the SOL/USD pair. This trend line suggests that the price may continue to face challenges in recovering. Despite this, there remains some buying interest near the $122 mark, indicating that bulls are still active in the market. However, the current trading position is below the 100-hourly simple moving average, which is a critical indicator for short-term price movements.

On the upside, Solana’s price encounters resistance at the $125 level and the aforementioned trend line. The next significant resistance level is identified at $128, with a crucial threshold at $130. A close above this $130 resistance could potentially lead to a more sustained upward trend, with further resistance levels at $135 and $142.

Potential for Further Declines

If Solana cannot break through the $125 resistance, there is a risk of further declines. Initial support is observed near the $122 level, with the first major support located around $120. This level also coincides with the 76.4% Fibonacci retracement of the upward movement from the $117 swing low to the $127 high. A breach below the $120 level might trigger a decline toward the $112 support zone, and a close below this level could lead to further losses, potentially reaching the $105 support in the near term.

Technical Indicators

• Hourly MACD: The MACD for SOL/USD is gaining momentum within the bearish zone, suggesting increasing selling pressure.
• Hourly RSI (Relative Strength Index): The RSI for SOL/USD is currently below the 50 level, indicating a bearish trend.

Major Support and Resistance Levels

• Support Levels: $122, $120
• Resistance Levels: $125, $128

From Author

The current situation for Solana illustrates the volatility inherent in the cryptocurrency market. The inability to hold above key price levels raises questions about the sustainability of recent gains and highlights the potential for further corrections. The presence of both support and resistance levels provides critical insights for traders navigating these market fluctuations.

Impact on the Crypto Market

• Solana’s price correction reflects broader trends affecting major cryptocurrencies.
• The formation of a bearish trend line may lead to increased selling pressure in the near term.
• Key support levels at $120 and $122 will be crucial in determining the next price movement.
• Resistance levels at $125 and $128 could hinder recovery efforts.
• Traders may adopt a cautious approach given the current market dynamics and price action.