Solana (SOL) is currently experiencing a significant decline, dropping over 17% and reaching the critical $118 support level. This sharp downturn has put considerable pressure on this key level, raising concerns among traders and investors about the possibility of a further breakdown. The $118 level has historically been a stronghold for the cryptocurrency, but with the current bearish sentiment in the market, its ability to hold is still being determined.
With the help of key technical indicators, this article will provide an in-depth analysis of Solana’s current price actions, assess the likelihood of breaking the $118 support, and explore potential scenarios for SOL.
As of the time of writing, Solana has dropped by 17%, trading at approximately $119.78 in the past 24 hours. Solana boasts a market capitalization exceeding $54 billion, which demonstrates a decrease of 18.45% and a trading volume surpassing $9.4 billion, indicating an increase of 182.21% in the past 24 hours.
Technical Analysis: Indicators Pointing To A Potential Break For Solana
On the 4-hour chart, Solana has demonstrated significant bearish momentum, with the price dropping below the 100-day Simple Moving Average (SMA) and currently attempting a break below the $118 support level. A successful breach below this key level could lead to a further bearish move for the cryptocurrency.
The Relative Strength Index (RSI) on the 4-hour chart has dropped to 24.74%, which is considered to be an oversold zone. This position of the RSI indicator signals that SOL could extend its bearish move beyond $118.
On the 1-day chart, Solana has experienced increased selling pressure as the price consistently forms bearish candlesticks. Specifically, this pattern shows sellers are gaining control over the market, pushing the price lower with each successive trading session.
Also, the formation of these bearish candlesticks, characterized by closing prices lower than their opening prices, reflects a pattern of sustained selling, which is often a sign of underlying weakness in the asset.
Finally, the 1-day RSI has also dropped below 50%, which further supports the possibility of further price drop. This drop suggests that bearish pressure is rising, as sellers are still active and influential in the market. The fact that sellers are still active implies that Solana will probably continue to decline.
Potential Scenarios: What Happens if $118 Fails?
If Solana can maintain its current bearish momentum and close below the $118 support level, it may continue to move downward to challenge the $99.44 support level. When this level is breached, the digital asset may experience further price loss toward the $79.24 support range and possibly other ranges below.
Conversely, should SOL’s price close above the $118 support level, it will start to ascend once more toward the $160 resistance point. Following a break above this level, the crypto asset may see further price gain to challenge the $170 resistance level and perhaps other levels above.
Featured image from Adobe Stock, chart from Tradingview.com
