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In April, Solana (SOL) encountered strong resistance at the $202 level, struggling to surpass it and entering a downtrend. The decline brought SOL’s price closer to the 200-day Exponential Moving Average (EMA) at $127. Currently, SOL found significant support in the $127 to $131 range and is trading around $141.
37% Value Loss and Falling Wedge Pattern
The downtrend over the past three months led to a 37% decrease in SOL’s value. During this period, the altcoin formed a classic falling wedge pattern on the daily chart, typically signaling a potential reversal.
The support provided by the $127-$131 range facilitated a breakout to the north, allowing bulls to test the $154 level. However, recovery attempts faced resistance at the 20-day and 50-day EMAs at $140 and $146, respectively, hindering significant progress.
200-Day EMA and Historical Downtrend
SOL showed some resistance despite retesting the 200-day EMA level, which it hadn’t tested for about nine months. Historically, the last time SOL traded below the 200-day EMA, it entered a downtrend lasting approximately 1.5 years from January 2022. The current 200-day EMA closely aligns with the $127 to $131 support range. If this support holds, there is potential for a short-term recovery.
SOL’s price is likely to fluctuate between $127 and $154 in the coming period. Investors can strategically plan their moves by taking advantage of reversals from these support and resistance levels. A sustained close above $154 could enable buyers to advance towards the $172 region. Conversely, if SOL closes below the $127 to $131 support range, it could enter a prolonged downtrend, potentially leading to oversold market conditions.
Technical Indicators and Funding Rates
The Moving Average Convergence Divergence (MACD) indicator still shows a bearish trend in SOL. For SOL to break out of its current consolidation phase, the MACD lines need to rise above the zero mark, signaling a change in momentum. Until this happens, investors should remain cautious as downward pressure persists.
According to Coinglass data, SOL’s funding rates have fallen below zero, indicating a bearish sentiment on exchanges. However, any improvement in these rates could help SOL gain short-term momentum.
