Solana: Can SOL break out to $18.2 after go deep to $12 level?
Disclaimer: The following analysis results are the personal opinions of the writer and should not be considered investment advice.
- The lower timeframe structure turns bullish.
- Bullish orders saw two strong reactions last week.
Solana has been one of the largest non-stablecoin market capitalization assets in the crypto ecosystem for quite some time. The recent drop to $37.5 wiped out almost 60% of its market value following the FTX crash.
A recent article highlighted how a bounce could happen in the $13.45 region. Over the past few hours, SOL has dropped much lower to hit $12.06 but has been met with a strong reaction. In doing so, he also emphasizes the formation of a range.
SOL price action
On November 10, the hourly chart shows Solana forming a bullish block. Highlighted by the cyan box, Solana is credited with giving an almost immediate, strong positive response in the field twice since that day.
Another thing to watch out for is the formation of a range (yellow) between $18.2 and $12.36, with the midpoint of the range at $15.32. This value has acted as support and resistance in recent days.
The second time was on November 14, when the price broke out of the bearish structure of the lower time frame by breaking a lower high of $14.42. As a result, the price changed to the upside for short-term traders. However, there is still a bit of risk involved in entering a long-term trade.
The buying pressure at $12.2 is encouraging, but it is 11.55% below where prices are trading at press time. The bullish take profit stands at $18.2, almost 30% to the north. Traders looking for a better entry can focus on the fair value gap left by SOL after this price rally to $12.5.
This underperformance is in the range of $13.1-$13.24. SOL has been testing it for the past few hours, and another test might offer a better chance of buying R:R.
Meanwhile, technical indicators have barely inspired the bulls' point of view. The RSI has firmly occupied the 50-55 zone for the past few hours. A/D has also decreased slightly over the same period. Therefore, buyers will need to manage risks carefully as the volatility of Solana can easily derail the setup.
Solana Funding rates
The sharp fall on November 9 and 10 took a hit to funding rates. The short trade is so saturated that short positions pay 2% of their nominal position size to fund it every 8 hours at a time on Binance.
Since then, everything has returned to 0%. However, the funding rate still suggests short positions in the futures market are preferred.
Nov 15, 2022