Solana [SOL] might retest June lows before another major rally and this is why…
Solana [SOL] has been struggling to recover above $40 after ending June on a bearish performance. This is despite its bullish start this month but the reason for this subdued performance is now evident upon further inspection.
It turns out that SOL has been trading within a wedge pattern underscored by descending support and ascending resistance lines since June. The higher support line has been pushing SOL’s short-term price action into higher lows. This is a sign that the bears have been losing their momentum but the descending resistance has also pushed the price into a tight zone.
SOL is about to exit the triangle pattern and it currently looks like a bullish breakout is on the way. However, there are factors that suggest a higher probability of a bearish retracement and a potential retest of mid-June lows. This means we might see it drop below $30 and as low as $28.
Source: TradingView
SOL traded at $37.09 at press time after pulling back from the high of $39.10 as of 15 July. This means it has been experiencing some sell pressure after briefly crossing above the resistance line. Its RSI is currently hovering within the 50% range and the MFI indicates that the accumulation is tapering out.
SOL’s Binance derivatives funding rate dropped substantially in the last 24 hours. This suggests that investor sentiment is shifting in favor of some downside after the price pushed into the descending resistance line. This observation is also backed by a drop in the supply held by whales by 0.19% in the last three days.
Source: Santiment
The drop in the supply held by whales means any more upside attempts will be too weak to counter the selling pressure from larger addresses. SOL’s current resistance retest may trigger another selloff
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