The crypto market is currently going through one of those weeks where uncertainty increases. As a result, crypto prices have assumed a bearish trajectory and SOL is among the digital coins that have retraced significantly after a bullish phase.
SOL’s price action has been moving within an ascending channel, restricted by resistance and support.
Its latest rally resulted in a support retest just above the $47 price level after rallying by almost 50%.
As of 27 July, the price of the altcoin stood at $37. However, it recovered slightly from a weekly low of $34.67 after briefly touching the support line.
Source: TradingView
SOL’s current level suggests that it is due for more upside in the next few days, assuming that it remains restricted within the support and resistance lines.
Its Relative Strength Index (RSI) is still in the neutral zone, just below the 50% level and it showed signs of recovery. The weekly sell-off appears to be tapering out as the Money Flow Index (MFI) attempted to level out.
Is there a risk of downside?
Economic data and the FOMC meeting may have spooked many investors to exit their positions. This would explain why SOL’s price dropped significantly in the last seven days.
Furthermore, investor sentiment seems to be improving in favor of the upside for now.
SOL’s FTX funding rate bottomed out at -0.0014% on 26 July, before improving to 0.0006% on 27 July. This indicates that investors in the derivatives market are buying, and this is often a reflection of the spot market.
Source: Santiment
The improving sentiment is backed by an uptick in Solana’s development activity.
Investors often consider this as a healthy sign, hence it might contribute to more favorable investor sentiment. However, this is not necessarily a guarantee, especially in the short term.
Source: Santiment
SOL has already retested the ascending support line at least four times. A retest of the same support level is bound to yield some weakness. Investors should thus be cautious with their expectations because there is a possibility of a break below support.
