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Disclaimer: The information presented does not constitute financial advice, investment advice, trading advice or any other form of advice and is solely the opinion of the writer
- Solana appeared to have bearish market sentiment, momentum and price structure
- It also provided a potential high-reward buying opportunity in the event of another price drop
Solana [SOL] saw an increase in social dominance as news of the impending FTX liquidation attracted more and more public attention. And yet, this spike was accompanied by a downward trend for SOL prices, dampening speculation that market sentiment had reversed itself.
Read Solana’s [SOL] Price forecast 2023-24
The assets saw rising Open Interest last week alongside falling prices to highlight the bearish sentiment. The price action showed that another dip towards $17 was also possible. If this happens, it could provide a buying opportunity for longer-term traders.
The month-long downward trend has not yet come to a halt
Source: SOL/USDT on TradingView
On the daily chart, Solana projected a bearish market structure. This happened on August 5, when the price fell below the recent higher low of $22.73. In mid-August it saw a sharp move southward. In eight days, the SOL fell as much as 23.8% at its lowest point.
This broke the bullish breaker block from the weekly time frame above the $20 region as support (red box). The Fibonacci retracement levels showed the 61.8% level at $20.18. The sellers managed to break the confluence of this Fib level and the higher timeframe breaker block in a move that demonstrated their dominance.
Their hold on the market remains, and at the time of writing, the downtrend and market structure remain undefeated. The RSI was below the neutral 50, underscoring the bearish momentum. The 78.6% retracement level at $16.94 is a line for the bulls to hold.
A test of this level could provide a buying opportunity targeting the local highs of $25.5, $29 and $32 (which is an ambitious target). If SOL falls below the $15.5 mark, it would invalidate the idea of a bullish reversal at the 78.6% level.
Market sentiment was tilting in favor of the bears
Source: Coinalyse
On September 10, the price fell from $19.6 to $17.8 and Open Interest increased by almost $30 million in contracts. Combined with the heavily negative funding rate on the day, this was evidence of bearish conviction over the past week.
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Since then, spot CVD has skyrocketed. The OI also climbed as SOL bounced out of the $17.6 area, showing buyers entering the market. However, this does not rule out the possibility of another dip as financing rates remained negative and spot CVD has flattened in recent days.