Solana (SOL) traders appear to be confident that the altcoin’s recent price decline is just a short-term decline and not an extended period of instability. This is evident from the position taken by Solana longs following a broader market liquidation that cost hundreds of thousands of dollars.
But do the indicators agree with this opinion? Here’s a thorough analysis of potential SOL price movements.
Solana traders are confident in the recovery of the altcoin
Solana has a long-short ratio of 1.14, according to Coinglass. As the name suggests, the ratio of long to short positions acts as a barometer of traders’ expectations in the market. When the ratio is lower, it means there are more shorts than longs in the market.
However, a value above 1 means there are more long positions than short positions. For context, longs are traders with positions expecting prices to rise. On the other hand, short traders are expecting a decline.
Thus, the current ratio indicates that Solana’s long positions dominate the market. Therefore, the average sentiment is bullish and, if confirmed, could prove profitable for these traders. Interestingly, this comes at a time when the market has seen the most liquidations over the past few days.
In the last 24 hours, SOL’s liquidation totaled approximately $60 million. Of this amount, long positions accounted for more than $57 million, and short positions accounted for the rest. Liquidations occur when a trader’s margin falls, prompting the exchange to close a position to prevent further losses.
This wave of liquidations was caused by Solana’s price falling below $215, which triggered a cascade of margin calls and forced closures.
SOL price forecast: not yet time for recovery
On the daily chart SOL price fell below the 20 and 50 exponential moving averages (EMA), which are technical indicators that measure trend direction.
When the price is above the EMA, the trend is bullish. On the other hand, if the price is below the EMA, the trend is bearish, as is the case with the SOL price.
Another noticeable trend in the graph below is that SOL price is trading below the demand zone at $210. If the altcoin fails to recover above this zone, the correction may intensify and The token price may drop to $189.36.
However, if Solana sees increased buying pressure, the trend could reverse and the price could rise to $264.66.
