Solana Bulls Cling to $20 Support Amidst Lack of Demand
Solana [SOL] has experienced increased network usage as transaction fees on Ethereum [ETH] and Bitcoin [BTC] rose. However, despite the surge in users, other metrics such as Total Value Locked (TVL) have been on a downtrend, and prices have followed suit.
Resistance Levels and Bearish Market Structure
On the 4-hour chart, there is a strong confluence of resistance between $21.8 and $22.5. Any movement into this zone is likely to face rejection. Additionally, the $21.33 level has also provided strong resistance on lower timeframes, although short-term sentiment favors the buyers.
Although the buyers tested the $21.3 resistance level, they did not display sufficient strength.
On the 12-hour chart, the market structure remains bearish. SOL experienced a dip to $23.74 on April 19, forming a higher low from mid-April. Subsequently, Solana formed a series of lower highs, indicating a bearish market. The Relative Strength Index (RSI) also fell below the neutral 50 level and has not crossed 55 since then, indicating ongoing bearish momentum.
Insights from On-Balance Volume (OBV)
Although Solana saw a bounce from the $20 area, suggesting some lower timeframe bullish momentum, the OBV indicates that demand remains weak.
Since April 24, the OBV has been unable to rise above the resistance level indicated on the indicator. A failed attempt on April 29 lacked buyer follow-through, causing both the OBV and the price to decline further.
Currently, SOL needs to break above the $21.33 level to establish a bullish structure. The OBV must also confirm this upward move to lend credibility. However, as of now, the sellers maintain control.
Bullish Sentiment on Shorter Timeframes
Rising Open Interest (OI) indicates bullish sentiment on shorter timeframes.
On May 7, the funding rate briefly entered negative territory but quickly climbed back above zero. This suggests that speculators likely hedged their short positions when SOL fell to $20. Since then, sentiment has shifted.
