Solana [SOL] bulls have faced a tough situation in recent weeks. Bitcoin’s [BTC] rally to $76K by 17 March saw Solana prices break out of a range that it had been within since the first week of February.
This range breakout naturally meant momentum and volume were on the bulls’ side, convincing traders that more gains were possible. In hindsight, the failure to defend the $89.9-range highs was the first sign of bearishness.
The 1-day chart showed that the range formation was only a consolidation after a sharp downtrend. During this consolidation, the OBV has trended higher to signal accumulation.
At the same time, the RSI remained above neutral-50 to sustain the idea that bullish momentum could last. In the broader picture, any rally would have struggled to overcome the $105-$120 supply zone.
The most recent one was unable even to break the $100-level. With the price back at the mid-range level, what should traders expect next?
Bounce or a further breakdown ahead for SOL?
The range extended from $76.6 to $89.9, with the mid-point at $83.3. At the time of writing, Solana was trading slightly below the mid-range level. The technical indicators were also firmly bearish.
The DMI highlighted a strong downtrend in progress on the 4-hour timeframe, with the RSI falling towards the oversold zone. The OBV was also about to make new local lows to capture the selling volume over the past ten days.
It is possible that Solana would bounce from the mid-range support, but traders have to be careful. In a range, the range extremes are the most desirable zones for a trade entry targeting the opposing extreme.
At the mid-range, and given the recent market sentiment, it is difficult to justify entering long positions.
The Bitcoin long squeeze to the $66.5k-level, at the time of writing, had pulled SOL into the magnetic zone at $83. To the south, another pocket of long liquidations lay at $79, just below the $80.2 lows made on 08 March.
Traders will want to see the current liquidity hunt bounce back above $83-$85 before they can have some faith in a short-term rally. This move can go as high as $94-$98 in search of short liquidations.
Final Summary
- Bitcoin’s sell-offs over the past two weeks affected SOL prices.
- In the next 24-48 hours, a drop to $79 is possible, but a short-term bounce would become possible if SOL climbs back above $83-$85.
