Solana (SOL) currently finds itself trading at the lower boundary of its ascending channel, which has acted as a critical support level since the beginning of the month. This recent decline towards support started on May 20. As of press time, SOL is trading at $167, reflecting a 7% drop over the past week.
Solana’s Battle at Support
SOL’s movement within an ascending channel began with an uptrend initiated on April 30, when the altcoin was valued at $129. By May 20, its price had surged to a peak of $184, before a wave of selling pressure set in.
Now, the coin’s price is precariously close to dipping below its 20-day Exponential Moving Average (EMA), a critical support level that has provided stability over the past 20 days.
A fall below this key moving average often signals a short-term trend reversal from bullish to bearish. The 20-day EMA currently acts as a line of defense, and a breach below this level suggests that sellers are beginning to dominate the market.
Technical Indicators Signal Bearish Momentum
Confirming this shift in market sentiment, the Moving Average Convergence Divergence (MACD) indicator shows a bearish crossover, with the MACD line intersecting the signal line in a downward trajectory.
This bearish crossover typically prompts market participants to exit long positions and consider short positions, further accelerating downward momentum.
Futures Market and Price Prediction
Additionally, SOL has seen a decline in open interest in its futures market since May 20. At $2.44 billion, open interest has decreased by 4% in the past week. This reduction indicates that market participants are closing their positions rather than opening new ones, suggesting waning confidence in SOL’s immediate price prospects.
Should SOL breach the crucial support level at $163, it could face a further decline to around $157.99. However, there is a glimmer of hope for the bulls. Despite the bearish signals, the positive funding rate across cryptocurrency exchanges indicates that futures traders are still betting on a rebound. This ongoing bullish sentiment in the futures market could trigger a surge in buying pressure, potentially driving SOL’s price up to $172.41.
