Solana Defends $19.2 Support Level
Solana (SOL) has shown strong performance since last Friday, with the bulls successfully defending the $19.2 support level.
Bulls Push Prices Past Short-Term Resistance
Over the weekend, the bulls managed to push SOL prices past a strong short-term resistance. This has sparked optimism that further gains may follow based on the recent price action.
Solana Network Update Impact
The latest Solana network update introduced highly anticipated features. However, shortly after the announcement, prices experienced a pullback.
Questions arise whether this minor pump was just a sell-off reaction to the news or the beginning of a larger rally.
Solana Surpasses $20 Psychological Level on High Volume
The bullish order block from 12 May on the 4-hour chart flipped to a bearish breaker and was retested as resistance on 24 May. However, the bulls made a comeback, registering rapid gains and swiftly breaking past the bearish breaker block. The charts displayed an imbalance signaling the strength of the bullish move.
At present, the H4 market structure remains strongly bullish, despite the rejection at $21.3, triggered by a bearish divergence between the price and the RSI.
The $20.35-$20.45 short-term support zone might undergo testing before another upward move.
The RSI remains above the neutral 50, indicating that the momentum of Solana has not yet flipped bearish. The DMI (Directional Movement Index) also indicates a strong uptrend, with both the +DI (green) and ADX (yellow) above the 20 value.
Decline in Spot CVD Raises Concerns
From 29 May, the spot Cumulative Volume Delta on the 1-hour chart has been in decline. Coinalyze data also shows a steep drop in Open Interest upon the rejection from the $21.3 resistance.
These observations suggest strong short-term bearish sentiment, with discouraged long positions due to the drop in OI. The situation might change if the CVD begins to tick higher, although the falling CVD with rising prices raises concerns about the organic nature of the rally.
Good Risk-to-Reward Trade Opportunity
Considering the price action, buying SOL at the $20.5 area could represent a good risk-to-reward trade, targeting the next highs at $22.4.