Solana Bulls vs. Resistance – An Analysis of SOL’s Market Outlook
Solana (SOL) has encountered difficulties in surpassing the $22.4 resistance level over the past five days. Back in late April, the price faced rejection at the $23.5 resistance. As of the time of writing, the market structure on the 4-hour chart appears bearish.
Bitcoin (BTC) managed to defend the $27.8k support level on May 1 and has since rebounded, reaching $29.2k at the time of writing. The upward movement of BTC could potentially have a positive impact on the sentiment surrounding SOL.
The Volume Profile tool reveals an intense battle occurring at the $22.4 level.
Market Structure Analysis
The 4-hour market structure currently displays a bearish trend after a higher low at $22.9 was formed on April 29 and subsequently broken on May 1. Since then, SOL bulls have struggled to surpass the most recent lower high.
A 4-hour trading session closure above $22.49 would indicate a shift in market structure back to bullish.
Although the bearish bias is evident on the 4-hour timeframe, the daily timeframe presents a bullish market structure. However, for a rally to ensue, the bulls must overcome all the sell orders placed at the $22.4 resistance zone.
The Visible Range Volume Profile tool highlights the Point of Control (red) at $22.18, denoting the level where the highest amount of trading activity has occurred in the past five weeks. Consequently, the bears are likely to put up a strong fight in this area.
The On-Balance Volume (OBV) remained flat throughout May, while the Moving Average Convergence Divergence (MACD) formed a bullish crossover below the zero line. When combined, these indicators suggest weakly bearish momentum with neither bulls nor bears in complete control.
Therefore, traders may consider waiting for a breakout above $22.4, followed by a subsequent retest, before buying SOL. The target for taking profits could be the Value Area High at $23.7.
Speculators’ Sentiment and Rejection at Point of Control (POC)
Over the past 24 hours, SOL briefly dipped from $22 to $21.5 before rebounding to $22.1. During this period, the Open Interest (OI) began to rise, indicating increasing bidding interest from speculators. Additionally, the funding rate was found to be positive.
However, on May 4, when SOL prices were rejected from the $22.4 resistance, the funding rate entered negative territory, and the Open Interest experienced a slight increase. This suggests that bears still maintain control in that region, emphasizing the significance of a session closure above $22.4.