Solana [SOL] blocked by a short-term supply zone – Can bulls bypass it?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- SOL was in a neutral structure on the three-hour chart.
- The Funding Rate remained positive despite a slowed development activity.
Solana [SOL] swiftly went from $20 to $25 on Friday, 20 January. Afterward, a crucial short-term supply zone blocked its upward price action extensively. At press time, SOL traded at $24.10 and still had to deal with the above-mentioned supply zone.
Read Solana [SOL] Price Prediction 2023-24
Fed watchers expect a dovish announcement from next week’s FOMC meeting. If their bets are confirmed, the markets could be triggered positively, tipping Bitcoin [BTC] and the rest of the altcoins for another round of price rallies.
But a hawkish FOMC release would clear the recent gains and send the markets into a temporary correction phase, affecting SOL too.
The supply zone blockage: Can bulls overcome it?
On the three-hour chart, the Relative Strength Index (RSI) was 49 and rested near the mid-level of 50 – thus showing a neutral structure.
However, it had retreated from the lower range, accompanied by rising On Balance Volume (OBV), indicating a genuine demand and rising buying pressure.
If the trend is sustained, the RSI could crossover the mid-level and push SOL to overcome the $24.33 hurdle and move near the supply zone’s (red) lower boundary of $24.60.
How much are 1,10,100 SOLs worth today?
However, bypassing the supply zone of $24.60 – $25.42 can only occur if BTC exceeds the $23.5K level. SOL could retest the overhead resistance at $26.61 if it clears the supply zone blockage.
But the above bias would be invalidated if bears devalue SOL beyond the demand zone (green) of $23.3 – $23.8. The drop could be contained by the 75-period EMA (exponential moving average) or the $22.67 support level.
Development activity slowed, but demand remained impressive
As per Santiment data, SOL’s development activity continues to rise, improving investors’ confidence as indicated by improving weighted sentiment. However, at press time, the development activity remained relatively flat as prices declined, denting investors’ confidence in the process.
But the Funding Rate remained positive, indicating a genuine demand in the derivatives market and a bullish outlook for the asset. As such, SOL could be tipped to overcome its resistance levels on its upward path.