Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
- The former bullish order block in the $15 vicinity has prevented Solana bulls from progressing
- Declining open interest meant futures traders do not anticipate a rally
Since mid-November, Solana bulls were repeatedly driven back from the $15 resistance zone. The technical indicators did not yet show strong upward momentum or large buying pressure behind SOL yet.
Read Solana’s [SOL] Price Prediction 2023-2024
A recent article highlighted why the $15 mark was critical. Here we take a look at how short sellers can look to trade SOL, and how this bearish notion can be invalidated.
The H4 bearish breaker was not yet breached and could offer a selling opportunity
On the four-hour chart, the Relative Strength Index (RSI) fell below neutral 50 to stand at 44 at press time. However this did not show a downtrend in progress. Meanwhile, the On-Balance Volume (OBV) has been flat over the past two weeks as well. The Chaikin Money Flow (CMF) was at -0.05, and any move lower would be an indication of significant selling pressure in the market.
The price action on the lower timeframes such as one-hour showed a lack of a definite trend. Solana bounced between the $13.14 and $15 values since 23 November, with two individual drops to the $12.8 level.
At the time of writing, Bitcoin ventured to the $16.7k mark but quickly moved upward as demand crept in. Further gains and a move past $17k could see SOL register gains as well. Yet, based on SOL’s chart, a shorting opportunity was more evident.
This was because of the confluence of a bearish breaker on the 4-hour timeframe alongside the range highs at $15. The $14.5-$15 area can be used to enter short positions. Invalidation of this idea would be a four-hour session close above $15.6. Meanwhile, to the south, the $13.15 and $11.3 levels can be used to take profit.
Futures traders were unenthusiastic about SOL breakout prospects
Since 24 November, the Open Interest behind Solana has waned. Even though SOL has tested the bearish breaker multiple times and the price consolidated beneath the $14 mark in the past two weeks, OI has declined from $298 million to $217 million.
In the event of a breakout past $15, the OI would likely see a large move upward. This could warn sellers that the bearish winds have shifted.