Solana (SOL) price has found it difficult to maintain upward momentum, especially after repeatedly failing to secure the $161 support level over the past two months.
Another failed breakout of this level recently sent the price of SOL down 13%, bringing it down to $139. As the cryptocurrency struggles with ongoing downward pressure, traders are wondering if further declines are on the horizon.
Solana traders have an ace up their sleeve
At the moment, Solana’s macroeconomic dynamics point to a bearish outlook, as reflected in key technical indicators. The relative strength index (RSI) fell below the neutral line of 50.0, signaling strengthening bearish momentum. The RSI’s position in the bearish zone suggests that selling pressure has intensified, with little sign of a reversal in the near future.
After Solana failed to break through the $161 resistance level, bearish sentiment intensified. With the RSI showing no signs of recovery, it looks like SOL will face more downward pressure in the short term, potentially pushing prices lower further.
Read more: Solana vs Ethereum: Full Comparison
Market sentiment around Solana also shifted to the downside. Traders are preparing to capitalize on the potential for further declines by placing short contracts in the futures market. These short contracts have now outperformed the long contracts as traders look to profit from the fall in the price of SOL.
This change in sentiment is also reflected in Solana’s funding rate, which turned negative for the first time in more than two weeks. A negative funding rate indicates that the market is predominantly bearish and traders are expecting more losses in the near future.
SOL Price Forecast: Finding Support
Solana’s price is currently trading at $139, just below the local support level of $140. Given the continued bearish momentum and negative market sentiment, a further drop to $124 is more likely. This level acted as support for SOL last month; earlier the cryptocurrency bounced from it.
However, if Solana fails to hold the $124 support level, a fall to $120 could be next, forming the lower end of the consolidation range below $161. This would mean a further decline in the cryptocurrency, leaving it vulnerable to additional losses.
Read more: Solana (SOL) price forecast for 2024/2025/2030.
On the other hand, if Solana manages to move $140 to the support level, it could have a chance to rise back to the $160 range. A break of local resistance at $155 would invalidate the current bearish outlook, giving SOL a fresh opportunity to recover and potentially move higher in the coming weeks.
