Solana’s emerging death cross signals potential losses for traders

Solana (CRYPTO:SOL) is showing signs of potential devaluation as technical indicators suggest a looming downturn.  

The 12-hour chart of Solana indicates the formation of a death cross, a bearish signal that could lead to significant price drops.  

A death cross occurs when the 50-day Simple Moving Average (SMA) trends downward toward the 200-day SMA, signaling potential downside risks.  

Currently, Solana’s 50-day SMA is approaching the 200-day SMA, indicating that a death cross is forming.  

If this pattern is confirmed, traders may see SOL’s price drop below the critical $110 support level.  

The death cross is typically interpreted as a signal for traders to exit long positions and consider short positions, anticipating further declines.  

Additional technical indicators reinforce this bearish outlook.  

Solana’s Directional Movement Index (DMI) shows strong bearish momentum, with the Negative Directional Indicator (-DI) above the Positive Directional Indicator (+DI).  

This setup suggests that sellers are in control and that downward pressure on SOL’s price is likely to persist.  

The Parabolic Stop and Reverse (SAR) indicator also supports this bearish sentiment.  

The SAR dots are positioned above SOL’s price, confirming the downward trend and indicating that the decline may continue. 

SOL has already seen a 16% drop in its value over the past month, with the current price hovering around $142.69.  

Furthermore, Solana’s funding rate on exchanges has turned negative, indicating that there is a higher demand for short positions among futures traders.  

This negative funding rate suggests that traders are betting on further declines in SOL’s price.  

If these short positions hold, Solana could see its price drop to around $133.66.  

Should the bulls fail to defend this support level, SOL could potentially fall further to $109.66, a level last seen during the broader market downturn in early August.

However, if market sentiment shifts from bearish to bullish, Solana’s price could recover and reach $148.20.  

This scenario, though less likely given the current indicators, remains a possibility if bullish momentum returns to the market.