Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
SOL has a bullish market structure
Negative sentiment and a slowdown in development activity could fuel a price correction
Solana (SOL) posted impressive mid-week price gains, up 10% at the time of writing. After the FTX exposure and subsequent implosion, SOL’s rally followed a previous massive dump. It traded at $14.49, still less than 50% of its pre-FTX saga value at the time.
You could be happy with recent gains if you bought SOL’s dip. However, a possible price correction to this level may also be in the offing.
Read Solana’s [SOL] Price Forecast 2023-24
If buyers lose momentum, a price correction could drop the altcoin below the 38.2% Fib level and settle at $13.67. A retest of this pullback zone could provide buying opportunities and long trade entry positions.
SOL represents a bearish order block; can the bulls get around it?
The FTX implosion sent SOL into a freefall, but the bulls have found resting places on three major supports since early November. These include $13.67 and Fib retracement levels of 23.6% ($12.89) and 0% (11.03).
Two price recovery attempts on November 14 saw a price correction to the $13.67 pullback level. However, another price recovery attempt on November 16 ended in a price correction, one that broke the previous support and established $11.03 as a new support level.
The latest price rally started on Wednesday, November 22, but it may fail to break through the resistance and bearish order block at the 50% Fib retracement ($14.97). The Relative Strength Index (RSI) pointed south from the overbought entry line. This could indicate a slight decrease in buying pressure.
While On-Balance Volume (OBV) reached higher highs over the past two days, it has yet to reach the previous levels that broke the 50% Fib level. This allows sellers to take back control if buying pressure continues to ease and force SOL into a price correction.
The pullback level for this possible price correction could be $13.67. However, since this level has already been tested four times, it can also be violated, pushing SOL back to the 23.6% Fib level ($12.89).
However, a candlestick close to the 50% Fib level ($14.97) would invalidate the bearish bias. In this case, a retest of this level as support could push SOL into another uptrend with $15.90 as a new target.
Negative sentiment and decline in development activities
SOL recorded a sharp drop in development activity and negative weighted sentiment, according to Sanitation. The pessimistic outlook based on sentiment-weighted was reflected in the derivatives market as Binance’s funding rates fell into negative territory.
The bearish sentiment in the derivatives market could spill over into the spot market and drag SOL into a price correction. Therefore, investors should follow the sentiment on SOL in addition to BTC’s performance.
This post Solana [SOL] is up 10%, but here’s the “but” of it all
was published first on https://ambcrypto.com/solana-sol-is-up-by-10-but-heres-the-but-of-it-all/