Why Solana [SOL] may not be in the clear despite its 13% rally to the $30 range
Solana [SOL] has finally chosen a side in the tug of war that has been going on between the bulls and bears since end of August. The cryptocurrency delivered a strong bullish performance in the last three days after finding support near the $31 price level.
SOL previously struggled to find a directional footing especially in the first few days of September. This is after concluding a bearish second half of August. Its lateral price action in the first week of September reflects the uncertainty that prevailed in the market.
The uncertainty had a negative impact on investor sentiment. SOL’s weighted sentiment metric indicates a sharp drop in investor sentiment in the first week of September.
This sentiment shift has not reflected in the price action considering the surprise uptick it delivered in the last few days.
SOL has so far pulled off a 13% uptick from its recent support level, to its $34.80 price at press time. Although this is not a major upside in the grand scheme of things, it represents recovery after previously falling out of it support range.
SOL’s Money Flow Index (MFI) confirms that traders have been reaccumulating at the lower price level, thus supporting its current recovery. The cryptocurrency is currently facing some friction at the 50% Relative Strength Index (RSI) level. This might yield another retracement in the absence of enough bullish volume.
Fortunately, the ongoing rally was backed by a robust increase in volume since the start of September. Although notably not the highest trading volume in the last four weeks. An increase in NFT trades volumes since the start of September has also contributed to organic demand and volume.
We observe a similar positive shift in the derivatives market. Both the FTX and Binance funding rates saw some improvements so far this month. This outcome may have also supported the current upside.
The state of SOL
It might come off as unusual that the weighted sentiment has not improved despite the positive shifts in other metrics. It might be the reason why SOL’s current rally cannot be classified as robust.
The lower sentiment might suggest that traders expect a short-term upside. On the other hand, there is still room for a sentiment shift especially in case of positive events that might trigger more confidence in the market.