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The cryptocurrency sector is experiencing a broad market decline, and Solana is not immune to the downturn. Recently, Solana's price dropped below the $130 mark, continuing a bearish trend that has seen a significant drop over the past 11 days. As Solana trades at $127, following a 5.53% decline overnight, the crucial $125 support level is under scrutiny, and market watchers are monitoring whether this level will hold amid the ongoing sell-off.
Bearish Trends and Key Support Levels
Solana (SOL) 's price trend has been notably bearish, marked by a 20% decline in recent days. The persistent sell-off has pushed the price below the $130 threshold, increasing pressure on the $125 support zone, which has historically been a pivotal point for potential reversals. However, technical indicators suggest a potential continuation of the downtrend, with the increasing likelihood of a "death cross" between the 50-day and 200-day Exponential Moving Averages (EMA). This could signal further downward momentum if the pattern materializes.
Solana's price chart reveals a pattern of multiple lower-priced rejection candles at the $125 support level, indicating substantial selling pressure. The chart also shows recurring double-top reversals, leading to sustained lower-high formations. This pattern reflects the considerable overhead supply and suggests that Solana's price action is behaving similarly to a descending triangle, despite the absence of a definitive resistance trend line.
Technical Indicators and Market Sentiment
Technical review of Solana's price trend highlights a potential double-bottom reversal, supported by bullish divergence on the Relative Strength Index (RSI). This indicates some optimism for a short-term reversal; however, the broader market sentiment remains cautious. The declining number of active addresses on the Solana Network further underscores the current bearish outlook. Over the past month, active addresses fell sharply from 33.15 million in July to 11.1 million in August, with daily active addresses dropping below 1 million.
Key Levels to Watch for Solana
Looking ahead, Solana's price action will likely hinge on its ability to maintain support above the $125 level. If this support fails, further declines could see Solana testing the $110 mark and potentially the psychological level of $100. These levels have historically provided multiple support points throughout 2024, and their performance will be critical in shaping Solana's near-term trajectory.
In the event of a bullish reversal, resistance levels to watch include the 200-day EMA at $140 and the 50-day EMA at $147. Additionally, previous double-top peaks at $163 remain key areas of interest, as breaking above these levels could signal a broader trend reversal for Solana. However, given the recent pattern of unbroken double-top formations, the market will need to see a sustained breakout to validate any significant upward movement.
Market Outlook
Overall, Solana's current price trend reflects broader market dynamics, with increased selling pressure and a notable decline in active network participants. As the market navigates these challenging conditions, key support and resistance levels will play a critical role in determining Solana's path forward.
