Solana exhibits a strong bearish trend as buyers struggle to defend $20

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• Solana bulls fought desperately to defend a higher timeframe support zone.
• A slump below $20 could see another 15% fall for SOL.

Solana [SOL] saw a strong wave of selling in mid-August. This bearish sentiment also swept across the rest of the crypto sphere and saw a plunge in prices. Its NFT space was performing well. A recent report highlighted a surge in sales volume a few days ago. However, the sentiment on the price chart leaned in favor of the bears.

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SOL was trading within a higher timeframe area of interest. It would be vital for the bulls to defend the $20 area and shift the market structure bullish on the lower timeframes with a move past $22.

A drop below $20.2 could see SOL prices fall to $17

The$20.26-$22.3 area was highlighted in cyan to demarcate a bullish breaker block from the 1-week timeframe. The 1-day chart showed that the market structure has been bearish since early August and that SOL was in a downtrend. The simple moving averages and the RSI also reinforced the idea of bearish momentum.

The DMI showed a strong downward trend on the daily chart with both the -DI (red) and ADX (yellow) above the 20 mark, which corroborated the inference from the price chart. The OBV has also slowly declined over the past two weeks.

The Fibonacci retracement levels (pale yellow) showed that the 61.8% and 78.6% levels at $20.18 and $16.94 could serve as support. However, a daily session close below $20.26 would breach the weekly breaker block and signal bearish intent. This would show that a move to $16.94 was likely to follow in the coming weeks.

The past 24 hours saw bearish sentiment seize control once again

On 25 and 26 August, Solana bulls were able to defend the $20.2 support and managed to force a brief bounce that reached $20.92. This momentary respite saw a rise in Open Interest, but it was short-lived. The OI began to descend once more alongside prices, which showed bearish sentiment and discouraged longs in the near term.

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In opposition to this view, the spot CVD has slowly but steadily trended upward since 18 August. There were hours of intense selling but it seemed demand was creeping in. This fueled bullish hopes that a recovery was possible.

A bounce to $20.9 and $22 was the potential short-term bullish scenario- but traders and investors must be prepared for the bearish scenario as well.