Are Solana bears on the move?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• The bulls failed to secure the breakout level of $26.85. 
• Open Interest rates declined, and more long positions wrecked.

Solana’s [SOL] pullback extended ahead of the Fed’s rate decision on 25/26 July. After Ripple Labs’ legal win, SOL graced a new 2023 high of $32. However, the celebration ceded fast afterwards, and SOL reversed part of the gains amidst pullback. 

Is your portfolio green? Check out the SOL Profit Calculator 

Will the 50% Fib stop sellers?

Source: SOL/USDT on TradingView

Fibonacci retracement levels (yellow) were plotted between the recent high of $32 and the swing low in mid-June of $12.8. At the time of writing, Solana price action had retreated to the $24 level. Based on the Fib tool, the 50% Fib level of $22.5 was the next key support level after the $24. 

Besides, the 50% Fib level also coincided with the June highs; hence bulls are expected to front defence at the area should the pullback extend lower. If the drop eases at the $22.5 – $24 area, then bulls could re-target $30, but they’ll have to bypass the $26.5 obstacle to advance. 

But the drop below the 50% Fib level will weaken SOL’s market further. Such an extended bearish overdrive could set SOL to retest the $20 psychological mark, especially if BTC records massive losses after the Fed decision. 

Meanwhile, the Relative Strength Index and On Balance Volume retreated lower, denoting a dip in buying pressure and demand in the past few days. 

Open Interest rates retreated too

Source: Coinglass

The declining Open Interest (OI) rates further confirmed the bearish grip. SOL’s OI has been treading southwards after peaking in mid-July. 

How much are 1,10,100 SOL worth today? 

Between mid-July and the time of writing, SOL’s OI dropped from >$400 million to below <$350 million, emphasizing the declining demand for SOL in the futures market ahead of the Fed decision. 

So further pullback could be on the cards, and the $24 could crack, forcing bulls to regroup at the June high and the 50% Fib level of $22.5.