Solana (SOL) Recovery At Risk With Bears Guarding Resistance

Overview

Solana (SOL) has recently encountered significant downward pressure, failing to maintain its position above $140. The cryptocurrency is currently consolidating losses below the $135 mark, raising concerns about its potential for recovery in the near future.

Recent Developments

After a failed attempt to stabilize above the $140 threshold, Solana’s price has seen a notable decline. It started a new downward trend, falling below critical support levels at $136 and $135 against the US Dollar. The price is currently trading beneath $135 and below the 100-hourly simple moving average, indicating a bearish trend.

A key bearish trend line has formed, with resistance positioned at $138 on the hourly chart of the SOL/USD pair. This trend line suggests that any upward movement in Solana’s price will face substantial resistance, complicating efforts for a recovery. If the bulls can defend the support levels at $128 or $125, there may be a potential for a recovery wave.

Solana’s price action has mirrored the declines seen in other major cryptocurrencies, such as Bitcoin and Ethereum, which adds to the overall bearish sentiment in the market. Following this trend, SOL dropped below the $138 and $135 support levels, gaining bearish momentum as it moved below $132. The price recorded a low of $124, after which it began to consolidate its losses.

Despite the downward trend, there was a minor recovery where the price climbed above the 23.6% Fibonacci retracement level of the decline from the $143 swing high to the $124 low. However, it still struggles to regain a foothold above the $135 mark. Immediate resistance is seen near the $134 level, which coincides with the 50% Fibonacci retracement level from the same downward move. The next significant resistance level is at $136, while the main resistance lies at $138.

If Solana fails to overcome the $133 resistance, there is a risk of further decline. Initial support on the downside is near the $129 zone, followed by major support at $125. A breach below the $125 level could propel the price down towards the $120 support zone. If the price closes below this area, it may lead to a further decline towards the $112 support level.

From author

The current technical indicators for Solana suggest a precarious situation. The hourly MACD is losing momentum in the bearish zone, indicating that the downtrend may continue unless a significant reversal occurs. Meanwhile, the Relative Strength Index (RSI) remains above the 50 level, suggesting that while there is bearish pressure, the asset is not yet oversold.

The price action of Solana is critical not only for its investors but also for the broader cryptocurrency market. The interplay between support and resistance levels will determine the short-term trajectory of SOL, and by extension, could influence market sentiment surrounding other cryptocurrencies.

Impact on the crypto market

• Solana’s struggle to maintain key support levels may signal broader bearish trends across the cryptocurrency market.
• The resistance at $138 could act as a psychological barrier for traders, impacting trading strategies.
• Continued declines in Solana may lead to increased volatility in the overall crypto market, as traders react to price movements.
• If SOL breaks below $125, it could trigger selling pressure, affecting investor confidence in other cryptocurrencies.
• A failure to reclaim the $140 level could diminish bullish sentiment, leading to further downward adjustments in market valuations.