- Solana has developed a bear market structure.
- Liquidity above $100 may drag the price before a reversal.
Solana (SOL) has been stuck in a downward trend for the past month. The price fell from $126 to $79 on January 23, but a recovery appears to be underway.
Despite a 23% gain last week, the technical structure remains weak.
In other news, Solana recorded the third highest NFT sales volume last week. However, this impressive performance may not guarantee positive price performance in the coming days.
Discuss the impact of recent breakouts
As mentioned earlier, Solana’s price has been steadily declining over the past month.
This series of lower highs and lower lows has yet to be broken. This means that the market structure on the 12-hour chart remains bearish.
However, the descending channel (purple) is broken. While this presented a potential buying opportunity, it was also risky as the buyer could be offside if they failed to break out.
Source: SOL/USDT on TradingView
RSI is above the neutral 50 level, reflecting bullish momentum at work. However, OBV held on to December highs. The failure to rise further over the past two months was a sign that buying was slowing.
This supported the idea that SOL will not be able to break the $100 mark anytime soon.
Heatmap showing where SOL bulls can be rejected
Source: Hiblock
Last month’s trading saw three major areas of resistance. The first two were the $110 and $104 regions, with estimated liquidation levels of over $2 billion.
The third was in the $94.2-$97.2 area.
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A bounce on January 28th visited this level before dropping it to $93.5. A move into the $112-$115 area seemed very likely due to the massive liquidity north of the region.
You won’t see the price drop reaching many liquidation levels.
Disclaimer: The information presented does not constitute financial, investment, trading, or any other type of advice and is solely the opinion of the author.