Solana was experiencing some downwards pressure after not being able to fully capitalize on a bull flag setup. Conceding the 38.2% Fibonacci level would highlight some more shortcomings for the alt as bears target a fresh low.
However, oversold readings on the RSI did present buyers with an opportunity to bag SOL at a discounted price level before the next run up. At the time of writing, SOL traded at $140.7, down by 3.5% over the last 24 hours.
Solana 4-hour Chart
Source: SOL/USD, TradingView
Based on the height of SOL’s flag pole, the alt was expected to see a run up of at least 90% from the breakout point of its bull flag pattern. However, SOL fell quite short of this mark after mustering only a 30% rally from the upper trendline.
As the altcoin market fell into a lull, SOL’s price constantly whittled over the past week and challenged the 38.2% Fibonacci Retracement level.
A retest of the 50% Fibonacci level could be observed if bears are able to penetrate this immediate defense and trigger another market decline. Such a move could also invite short-sellers who would salivate at the opportunity of trading SOL below its golden Fibonacci Retracement zone.
Reasoning
Now, the RSI was close to oversold readings and the same was expected to invite traders to buy SOL at a discounted price level. However, the RSI would need to move above 45-50 to order to flip this bearish bias.
The MACD and Awesome Oscillator maintained their descent below their half-line and projected further downside in the coming days.
Conclusion
SOL was exposed to an extended sell-off after threatening to close below its 38.2% Fibonacci level. The indicators were expected to generate additional selling pressure before buyers are able to offer any counter-resistance.
Since the market presented more opportunities for sellers, shorting SOL below its present defense would be a better call for traders.
