Solana buyers defend the $20 support but the trend remains bearish
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Despite signs of lower timeframe bullish sentiment, buyers should be wary of the stiff resistance at $22.
- Bearish traders could wait for a reaction from this resistance before entering the markets once more.
Solana bulls managed to force a bullish market structure break on 5 May when they succeeded in breaking the previous lower high at $22.4. After this, the sentiment across the crypto market became bearish.
Read Solana’s [SOL] Price Prediction 2023-24
It came after Bitcoin [BTC] faced rejection at $29.6k, and the past week saw large losses for both BTC and SOL. At the time of writing, Solana saw a relief rally, but can it break the downtrend?
The confluence of resistances meant buyers will have a hard time driving a rally
An H4 trading session closing above the $21.33 mark will flip the market structure of SOL to bullish once more. The RSI was back above neutral 50 and highlighted the strong upward momentum over the past 48 hours.
However, the OBV continued to form a series of lower highs. This showed that despite the bounce from $19.8, the buying volume was not enough to enact a rally. Instead, it was more likely that the sellers would push the prices lower once again.
There were two levels of importance for Solana in the coming days. One was a level of imminent resistance at $21.33, and the second was $22.5.
The latter is more significant because it lies at an FVG (white) as well as in an H4 bearish order block (red). Therefore, a retest of this area can be used to enter short positions targeting the $19.8 support.
Open Interest begins to pick up as speculators flip bullish beneath resistance
Realistic or not, here’s SOL’s market cap in BTC terms
Open Interest was in slow decline since 8 May, but the last 24 hours saw traders buck this trend. Speculators were more willing to bid for SOL as noted by the rise in OI alongside prices after Solana climbed back above $20.5.
The funding rate was positive and rising, showing that long positions were the majority once more. Taken together, it showed there was a good chance SOL can climb above $21.33. Further gains past the $22-$22.5 region was unlikely.