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Solana price faces critical test as key support level wavers

GrafaGrafa2024/08/22 02:20
By:Isaac Francis

Solana (CRYPTO:SOL) is currently navigating a precarious situation, with its price hanging by a thread near the crucial $131 support level. 

After reaching a peak of $163.60 just two weeks ago, the cryptocurrency has seen a significant downturn, shedding 15% of its value and trading at $140.39. 

The outlook for Solana remains uncertain as bearish momentum gains traction, raising concerns about a potential further decline.

The Moving Average Convergence Divergence (MACD) indicator on the SOL/USD daily chart has turned negative, signaling a bearish trend. 

The MACD, which is essential for identifying trend reversals and measuring price momentum, shows that Solana’s recent gains are at risk of reversal. 

The longer Exponential Moving Average (EMA) has crossed above the shorter one, further confirming the bearish sentiment around SOL.

Solana's price had attempted a V-shaped recovery between July 31 and August 10, a pattern that often suggests a strong rebound. 

However, this recovery was short-lived as the price faced resistance at $163.60 and has struggled to regain momentum since then. 

The current challenge for SOL is to maintain its position above the $131.06 support level. 

If this support fails, Solana could see its price drop to as low as $121.09.

The Awesome Oscillator (AO), another key indicator of market momentum, also shows a negative reading, reinforcing the bearish outlook. 

The AO compares recent price movements to historical ones, and its negative position suggests that the previous upward momentum for SOL has been effectively challenged. 

This adds to the likelihood of a further decline if the current trend persists.

Despite the bearish indicators, there is still a possibility of a rebound. 

If Solana can defend the $131.06 support level, the price could bounce back to $142.09 or even $151.98. 

However, the token remains at a critical juncture, and its ability to hold above this support will determine its near-term trajectory.

At the time of reporting, Solana was priced at $142.54.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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