Solana (SOL) is a blockchain platform that aims to offer fast, scalable, and secure solutions for decentralized applications. However, the project has been facing some challenges in the past few weeks, as the price of its native token has been on a downward trend.
Bears burst through $20 psychological level
Solana’s price action has been bearish since it reached an all-time high of $58.38 on May 18, 2023. Since then, the price has dropped by more than 65%, breaking several support levels along the way. The most recent one was the $20 psychological level, which was flipped to resistance on May 26, 2023.
The flip of the $20 level to resistance was a significantly bearish signal, as it indicated that the buyers were unable to sustain the upward momentum that started from the $19.8 support level.
The failure to hold above the $20 level also meant that Solana faced a confluence of resistances at the $22.5 area, which consisted of a horizontal resistance line, and a falling trendline. This area was likely to act as a strong barrier for any potential bullish reversal.
Open Interested Gets Involved
According to the data from Coinalyze, the rising open interest (OI) in the Solana futures market suggested that the bearish trend was likely to continue, as more traders were entering short positions to bet on further downside. The OI reached a record high of $246.5 million on May 26, 2023, indicating a high level of speculation and risk in the market.
The technical indicators also confirmed the bearish outlook for Solana. The relative strength index (RSI) was below the 50 levels, indicating a lack of bullish momentum. The on-balance volume (OBV) was making lower highs, indicating that the selling volume was outweighing the buying volume. The moving averages (MAs) were also in a bearish alignment, with the 50-day MA below the 100-day MA and both below the 200-day MA.
