Disclaimer: The results of the following analysis are the sole opinion of the writer and should not be considered investment advice.
Solana had crucial support at $ 37.71, but this level was broken with a quick move as Bitcoin plunged from $ 22,000 to $ 21,000 within four hours.
At the time of writing, Solana had a strong bearish outlook and a retest of the $ 38 zone could offer a shorting opportunity. The vendors took the driver’s seat on July 24 and haven’t given up yet, and the bleeding could continue throughout the week.
SOL- 2 hour chart
Based on the swing low and swing high at $ 31.82 and $ 47.36 respectively, the Fibonacci retracement levels were plotted. The 61.8% retracement level merged with the horizontal level at $ 37.71, but SOL broke through this region strongly.
The previously bullish pattern was also broken last week when buyers were unable to defend the $ 43- $ 44 region.
Solana has had a bullish structure with shorter time frames since the beginning of July. A rally from $ 26 to $ 42 was initiated in mid-June. It was also supported by steady demand.
In July, the bulls were able to maintain the bullish trajectory of the SOL as they pushed the coin to retest the $ 38 region twice as resistance and flip it to support two weeks ago. Another leg up at $ 47 materialized, but Bitcoin was rejected at $ 24.1k.
Bitcoin faced resistance at $ 21.6k- $ 21.9k and areas of $ 22.5k. An upward move seemed unlikely. Action-wise, it was a similar story for Solana. SOL would face intense selling pressure at $ 37.7 and in the $ 39.5- $ 40.5 area.
The 2-hour RSI fell below the neutral level of 50 a few days ago. In the last few hours of trading, it also fell below 40, to signal strong bearish momentum.
The Stochastic RSI was in oversold territory. A bearish crossover into overbought territory a few hours later can be a signal for the next bearish move.
OBV has slipped below a support level since mid-July. Once again this highlighted the strong selling pressure behind SOL. Volume favored the bears and buyers did not seem willing to bid yet.
Strong bearish momentum was evident for Solana and the next support levels to watch out for are $ 35.15 and $ 32. A rebound to test the $ 38 area again as resistance could occur, but such a move should be seen as an opportunity to sell the asset.