Solana, Buying Pressure Returns... The Decisive Point is the 5.41 Million SOL Sell Wall

▲ Solana (SOL)/AI generated image

Solana (SOL) is forming a reversal structure after weeks of selling pressure, and whether it breaks through the 5.41 million SOL sell wall has emerged as the biggest watershed for an additional 14% additional rise.

According to BeInCrypto, a cryptocurrency media outlet, on May 7 (local time), Solana traded around $90, showing a bottoming-out structure on the daily chart. The recent trend is unfolding with an 11% rebound, an inverse head and shoulders pattern, and a recovery in spot demand, and whether it breaks through the large supply zone situated above the price has been presented as a key variable determining a 14% upward scenario.

Solana has been forming an inverse head and shoulders structure on the daily chart since late March. The right shoulder was formed in late April, and Solana has rebounded approximately 11% from that low, moving towards the neckline, which is the breakout baseline. The 20-day exponential moving average (EMA) is approaching the 50-day EMA, showing potential for a bullish cross. However, both short-term EMAs are still below the 100-day EMA, and the 100-day EMA is suppressing the upward trend at approximately $93.91.

On-chain flows have also shifted from selling to accumulation. According to Glassnode data, the net position change on exchanges has turned to a buying advantage. From April 22 to May 1, exchange inflows were strong, with approximately 1.4 million SOL moving to exchanges on some days. However, SOL moved out of exchanges for five consecutive trading days until May 6, and a net outflow of 543,961 SOL was recorded on the most recent day. This suggests that buyers may be absorbing supply faster than sellers are releasing it.

However, the first major resistance lies just above. Glassnode's acquisition price distribution heatmap shows that approximately 5.41 million SOL are concentrated in a narrow range just above the current price. This range has historically acted as a resistance level, and it is a price point where holders who have reached their breakeven point might start selling amidst a bullish trend.

In terms of price ranges, Solana is currently battling at the 0.618 Fibonacci retracement level of $90.03. Reclaiming this level would open up the 0.786 Fibonacci retracement level of $92.41, which overlaps with the 5.41 million SOL acquisition price concentration zone between $91.70 and $92.43. Above that, the 100-day EMA at $93.91 and the inverse head and shoulders neckline at $96.95 are located sequentially. If $96.95 is definitively surpassed, the pattern will be activated, and the measured target price is presented as $111, a 14.45% increase.

Conversely, if it fails to hold above $90.03, $86.69 and $84.63 are presented as the next downward targets. Losing the right shoulder low of $81.29 would weaken the credibility of the entire current reversal pattern. BeInCrypto reported that while the shift to net exchange outflow and the chart structure lean towards an upward trend, the 5.41 million SOL supply zone and the 100-day EMA still remain above the uptrend.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*