Solana's Price Rally: A Bearish Divergence?
Solana Price Action: A Cautious Outlook
Solana (SOL) experienced a 12% surge last week, mirroring broader market recovery attempts. However, a bearish divergence in key technical indicators casts doubt on the strength and sustainability of this upward trend. Let's delve into the details.
Bearish Divergence in Solana's Chart
While SOL's price increased over the past seven days, its Chaikin Money Flow (CMF) indicator showed a decline, forming a classic bearish divergence. This suggests weakening buying pressure despite the rising price. The CMF, which measures buying and selling pressure based on volume and price, ranges from -1 to +1. Positive values signal strong buying pressure, while negative values indicate selling dominance. A bearish divergence, where price rises while CMF falls, indicates a potential price reversal.
Source: TradingView
High Demand for Short Positions
Further supporting a bearish outlook is Solana's long/short ratio, which currently sits at 0.97. This indicates a greater number of short positions (bets against price increases) than long positions, signaling bearish sentiment among derivatives traders.
Source: Coinglass
Potential Price Scenarios for SOL
Currently trading at $139.41, SOL finds support at $136.92. If buying pressure continues to wane, a test of this support level is likely. A breakdown below this level could drive the price towards $130.82.
Source: TradingView
Conversely, a resurgence in buying interest could push SOL towards $152.87, invalidating this bearish analysis.
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Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Always conduct thorough research before making any investment decisions. Market conditions can change rapidly.