SOL fell, just like the rest of the market. Is there a silver lining though?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Higher and lower timeframe trends of Solana prices seemed to be at odds, suggesting a bullish reversal could soon occur
- Lack of selling volume recently meant that the pullback could be shallow
Solana’s [SOL] network saw a significant increase in social media engagement recently. A large part of this can be attributed to the Jito [JTO] airdrop. As a result, the DEX volume on Solana’s network also saw a huge uptick.
Solana’s NFT sales also jumped higher last week. In fact, AMBCrypto’s recent report had also noted a rise in network activity, with the Solana blockchain ranked number 1 for total transactions in November. Despite these developments, however, the token saw a pullback recently on the price front.
Breakout past November’s range could be wholly retraced
A range that Solana traded within for the most part of November was marked in yellow. It climbed from $51.1 to $64. On 7 December, SOL broke out past the range highs and made it to $77.78. Alas, it has declined since then.
The RSI fell below neutral 50 to show a shift in momentum in favor of the bears and the On-Balance Volume (OBV) also trended downwards over the last three days. This suggested that selling volume was stronger. The volatility on Monday saw a candlewick to $64.18 on the 2-hour chart which saw a quick bounce.
And yet, the two-hour timeframe signalled a bearish market structure. The move below the recent higher low at $70 (orange) marked this shift in structure. The Fibonacci retracement levels (cyan) plotted based on the rally from the range highs noted that $63.11 and $66.24 could be levels where a bullish reversal could happen.
Drop in Open Interest illuminated market participants’ sentiments
The last two days of trading saw Solana’s price slowly decline from $7.78 to hit $70. This was accompanied by a fall in Open Interest (OI). The inference from the drop in OI and prices is that market participants are losing their bullishness.
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Surprisingly, the spot CVD has trended higher. This is a sign of healthy demand for the token in the spot markets, even though the short-term sentiment has been bearish. Therefore, the recent pullback could be temporary and shallow. On the higher timeframe charts, the $60-$65 zone represents a support zone that could see bulls initiate a recovery.
