Solana [SOL] hits $24 hurdle and retreats — Bulls can bid here

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

• SOL’s RSI on the four-hour chart headed to the oversold territory at press time 
• Open interest rates declined as short positions dominated long positions at press time

At the end of April, Solana [SOL] investors were all smiles after receiving over 17% gains. Notably, SOL rallied from $20.36 to $23.99 before entering a correction. At press time, SOL’s retracement had shed over 11% of its value. It traded at $21.33. 

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According to a new report, the Solana network has seen increased traction lately, with trading volumes surpassing pre-FTX levels. Could it prop up SOL’s value in the short term?

However, if the FOMC announcement puts downward pressure on Bitcoin [BTC], SOL could retest key support and offer new buying opportunities. 

Will sellers sink SOL further?

Source: SOL/USDT on TradingView

At press time, sellers had the upper hand on the market, as the price action was below 50-EMA and 1000-EMA. In addition, the RSI had slid near the oversold territory while the On-balance Volume (OBV) dipped further – Confirmations of elevated short-term selling pressure. 

If BTC drops below $28k following the FOMC announcement, SOL could plunge further and retest the daily timeframe bullish order block and support zone of $19.34 – $20.40 (cyan). 

A pullback retest and increased demand at the support level could see SOL rally toward the Fair Value Gap (FVG) of $23.19 – $23.98. The above level offer strong resistance toward SOL’s recovery. Further uptrend above the FVG could see SOL hit the supply zone at $26. 

Two long trade set-ups are possible if that’s the case. First is an entry above $20.40, targeting $23.99 (FVG) with a stop loss of $19.00. The second setup involves an entry at $24.00, targeting $26 with a stop loss below $23.00. 

A close below $19 will invalidate the bullish thesis above. However, the drop could slow at March swing low near $17.30. 

Open interest rates declined; short positions dominated

Source: Coinglass

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SOL’s open interest rate dipped slightly since 1 May. It dropped from $272.84 million on 1 May to $262.86 million at press time (3 May) – a slight drop in demand that favored near-term sellers.

Similarly, traders favored holding short positions over long positions, with shorts dominating at 52.51% in the past four hours – a mild-bearish sentiment that could push SOL lower if the trend persists. 

Source: Coinglass