Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- There was a possibility that SOL could retrace the past week’s losses before heading lower again.
- The slow grind higher for prices in the past week suggested sentiment could begin to shift bullish.
The crypto market was at an uncertain place. The sentiment has been strongly bearish over the past two weeks but many altcoins showed that a break in the current bearish structure was possible. Solana [SOL] was among them, but such a structural break need not be followed by an uptrend.
Read Solana’s [SOL] Price Prediction 2023-24
A move back to the late May highs before another rejection was also possible- so traders have a decision to make. Do they try to ride the lower timeframe momentum upward, in the event of a bullish shift? Or do they wait for higher probability shorting opportunities?
The confluence of Fibonacci and imbalance near $17 could halt the progress of SOL bulls
Source: SOL/USDT on TradingView
On the daily timeframe, the Solana market has been bearish since 8 May. The early June upward moves to $22.3 did not change the higher timeframe outlook. It turned out to be a swift bearish reversal on the H4 chart after what looked to be an uptrend from $20.3.
At the time of writing, the price was stuck beneath the 50% Fibonacci retracement level and trading volume was low. This pointed toward sidelined market participants waiting for a direction to be established. The RSI was at 56 to show upward momentum for SOL but its OBV was unable to break above a significant resistance level.
This level stretched back to May and served as a support back then. Hence a move above this level would be one of the first strong signs of an uptrend on the 4-hour chart. Yet, until that time, traders can be bearishly biased.
The FVG at the $16.8 region (highlighted by the white box) had confluence with the 61.8% retracement level at $16.86. A test of this level or the imbalance itself can provide a risky shorting opportunity for SOL bears, targeting the low at $12.8.
Coinalyze data showed sentiment remained bearish despite the bounce
Source: Coinalyze
The spot CVD of Solana has been in a downtrend in June. On 11 June when the prices tumbled, the funding rate surged deep into negative territory. This reflected the dominance of short positions in the market.
How much are 1, 10, or 100 SOL worth today?
Since then, the price has slowly climbed higher, but the Open Interest slid lower on the chart. This signaled discouraged long positions and that bearish sentiment prevailed in the market.
Therefore, while a bullish reversal cannot be ruled out, the evidence at hand pointed toward further losses for SOL.
