Buyers Struggle to Defend $20 as Solana Shows Strong Bearish Trend

Solana’s Bearish Trend Analysis

The 1-day chart reveals a persistent bearish trend within the Solana market structure since early August, indicating a downtrend for SOL. The conjunction of simple moving averages and the RSI further bolsters the notion of prevailing bearish momentum.

Solana bulls exerted significant efforts to safeguard a support zone on a higher timeframe.

A potential decline below the crucial $20 mark may precipitate another substantial 15% decrease for SOL.

Solana’s Market Sentiment and Recent Performance

Solana (SOL) encountered a notable wave of selling during mid-August, which influenced a bearish sentiment across the broader cryptocurrency landscape, leading to price plunges. In contrast, its NFT sector demonstrated robust performance, as evidenced by a recent report showcasing a surge in sales volume a few days back. Nonetheless, the prevailing sentiment on the price chart tilted in favor of the bears.

SOL’s trading activities occurred within a region of interest on a higher timeframe. To instigate a bullish shift in the market structure on shorter timeframes, breaching the $20 level and progressing beyond $22 holds paramount importance for the bulls.

If SOL’s price dips below $20.2, there is a potential for a decline to $17.

Key Levels and Technical Indicators

The price range of $20.26 to $22.3, highlighted in cyan, signifies a bullish breaker block according to the 1-week timeframe. The 1-day chart reiterates the bearish trend dating back to early August, with SOL firmly entrenched in a downtrend. The alignment of simple moving averages and the RSI further underscores the prevailing bearish momentum.

The DMI indicator on the daily chart accentuates a strong downward trend, as both the -DI (red) and ADX (yellow) have surpassed the 20 mark. This aligns with the insights drawn from the price chart. Additionally, the OBV has exhibited a gradual decline over the past fortnight.

The Fibonacci retracement levels (pale yellow) point to potential support at the 61.8% and 78.6% levels, positioned at $20.18 and $16.94, respectively. A daily session close below $20.26 would breach the weekly breaker block, signaling bearish intentions. This scenario could trigger a subsequent move towards the $16.94 mark in the weeks ahead.

Recent Market Performance

Over the past 24 hours, bearish sentiment has regained dominance once again.

During August 25 and 26, Solana’s bulls effectively defended the $20.2 support level and managed to prompt a brief rebound, pushing the price to $20.92. Although this momentary relief led to an increase in Open Interest (OI), the upturn was short-lived. OI subsequently declined in tandem with prices, underscoring the persistence of bearish sentiment and discouraging near-term long positions.

In contrast, the spot CVD has demonstrated a gradual upward trend since August 18, suggesting that despite intermittent periods of intense selling, demand has shown signs of resurgence. This has fueled hopes of a potential recovery.

While a short-term bullish scenario involves a rebound to $20.9 and $22, traders and investors must remain prepared for the possibility of a bearish turn of events.