- Solana forms an inverse cup-and handle pattern. Traders maintain a strong positive bias towards Binance.
- Technicals are bullish, but sentiment is weak.
Solana [SOL] After bouncing off $135, the price has formed a classic cup and handle pattern.
SOL was trading at $170.20 as of the writing. This represents a drop of 1.57% in the past 24 hours.
Despite the minor drop, the handle was still intact and bulls are continuing to test out the downward trendline.
A confirmed breakout over $200 would trigger an upward impulsive move and confirm the bullish thesis.
TradingView
Activity is balanced with slight outflow bias
The 16th May exchange flow data showed a $148.49M increase in flows and a $149.55M decrease in outflows. Both metrics were close together, suggesting that the selling pressure was low.
Most investors appear to have been holding their investments rather than exiting.
This is especially true when prices are nearing major resistance. The absence of large outflows can indicate weak confidence.
Solana could need to see stronger accumulation signs in order for him to be able break through the psychological $200 mark.
CoinGlass
Positioning of the traders reveals a long-bias dominant.
Data from Binance showed that 70.53% (or 203,060 traders) were holding long positions as of the press release. This Long/Short Rate was 2,39. The clear imbalance indicates high expectations of further gains.
It is often the case that such positioning fuels breakouts. This can also lead to a sudden spike in the price of liquidation, if there is a price reversal.
The strong tendency towards longs is a reflection of traders’ confidence, despite the risk. Any movement above $200 will accelerate as the sidelined money joins in or when shorts become squeezed.
Coinglass
Solana’s weighted sentiment remained at a negative -0.46, indicating a cautious attitude among participants. Although the chart is bullish, there hasn’t been a shift in sentiment amongst participants.
In the past, rallies started under a negative sentiment have tended to last longer.
This tempered sentiment may reduce the likelihood of a reversal in an overbought situation. This pessimistic sentiment could worsen if the market fails to recover $200.
The technical and sentiment outlooks are still misaligned at the moment, causing a lack of confidence in the markets.
Retail backs down?
The social media metrics are deteriorating along with the decline in engagement. The volume was 162, but dominance fell to 3.74%.
The figures revealed that Solana had lost its place as the retail center. This could be a positive for Solana.
Bullish trends can often be observed when the community is quiet. Even so, a weak interest in the community may slow down any momentum. Social Volume may indicate a growing level of conviction. However, for the moment, there is still a low level of interest.
SOL is a technical package that offers a lot of promise. Its clear structure with handle and cup, as well as its strong positioning on the long side are all contributing factors.
The broader market behaviour is mixed. Weak social volumes and a slightly negative mood reveal a general lack of conviction.
The price actions suggest strength while community and emotional indicators lag.
It could be a catalyst for a move back to previous heights if Solana is able to successfully reclaim the $200.
Market participants will continue to be on high alert until that time, waiting for confirmations of the current rally before they commit more liquidity.
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Source: ambcrypto.com
