Solana (SOL) has been making positive noises lately with an increase in price. However, a crypto strategist known as Altcoin Sherpa on social media platform X believes the euphoria could be short-lived.
Despite last week’s remarkable rally, Altcoin Sherpa states that Solana is still stuck in a downtrend, casting doubt on the sustainability of the current momentum.
Altcoin Sherpa points out a critical resistance level around $19.50 that Solana must overcome to change its trajectory. The crypto analyst highlights a worrying pattern: Solana has consistently hit lower highs since hitting its 2023 peak of $32.30 in July. This pattern suggests that any attempted rally has been accompanied by increasing selling pressure, raising questions about the strength of the recent recovery.
Altcoin Sherpa advises those considering entering the market to exercise caution and states:
“It’s nice to see some recovery, but every rally in recent weeks has only resulted in a lower high. Anyway, if you want to make an investment, it can’t be bad to accumulate less than $20.”
Currently, Solana is trading at $19.12 Coin geckowith a modest gain of 1.1% in the past 24 hours and a seven-day rally of 4.5%.
Solana support depends on FTX liquidation
In case SOL’s latest rally loses steam, Altcoin Sherpa identifies the $14 level as a potential support zone. However, he underlines a crucial factor that could affect Solana’s near-term fate: the impending liquidation of a massive Solana stock held by troubled crypto exchange FTX, worth as much as $1.16 billion. The outcome of this liquidation could have a significant impact on Solana’s price stability.
SOL market cap currently at $8.08 billion. Chart: TradingView.com
Supporting Altcoin Sherpa’s bearish outlook is one analysis of the main technical indicators. The Relative Strength Index (RSI) indicates a decline in momentum, signaling a possible downturn for Solana. Additionally, the Awesome Oscillator (AO) has moved into negative territory, providing additional confirmation for the bearish sentiment.
If selling pressure continues to build, Solana’s price could test the psychological level of $18.00 and fluctuate around the centerline of the current trading channel. In an even more dire scenario, the SOL could fall even further to reach the channel lower limit at $17.29.
The number of long positions that have already been liquidated is 45 times the number of short positions, according to CoinGlass liquidation statistics.
Source: Coinglass
Potential turning point
However, there is a glimmer of hope for Solana investors. In the worst case scenario, if the downtrend continues, Solana’s price could eventually find support in the demand zone marked by the last candlestick before July’s notable uptrend began. This area tends to attract buyers and could serve as a potential turning point for SOL’s fortunes.
While Solana’s recent rally has created excitement, caution is advised as technical indicators and market dynamics point to a possible continuation of the downtrend. The crypto world remains as unpredictable as ever, and investors should consider their options carefully before diving in.
(The content of this site should not be construed as investment advice. Investing involves risks. When you invest, your capital is subject to risk).
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