SOL buckles below support - Will it retrace back to $48?

We may move back to $57 first, but we see $52 as a very likely target for SOL.

TLDR

• SOL breaks below the uptrend line and support at $56.
• The minimum downside target is $52, but $48 is also in play.
• Shorts outpacing longs signals fading momentum.
• Long-term buys are near $44 if there is a deeper pullback.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

SOL 4hr

Technical analysis

• Price battled at the local horizontal support of $56 since Thursday of last week. However, price has now broken below. 
• On the last meaningful move down, price found support at the main uptrend line. However, price has now retested the uptrend line and broken below it on the 4hr and 12hr timeframes. 
• It’s possible SOL can retest back into the horizontal level of $56.40 and reject from the underside of the resistance.
• The technicals suggest that SOL could head substantially lower, to $52 and even $48. 
• The 3D and Weekly RSI both remain in overbought territory.

Market mechanics

• Open Interest is not far off its highs again, now back to $795m, up 20% in the last few days. 
• The OI-Weighted Funding Rate is at 0.0095%, indicating a slight bias to be Long but that Longs and Shorts are in even balance. However, the OI-Weighted Funding Rate has come down from 0.0150% since yesterday, indicating that more Shorts have come in whilst some Longs have closed out.
• We can see this from the Long/Short Ratio at 0.9142. More market participants have chosen to Short in the last 24 hours than Long. 

Cryptonary’s take

From a mechanics perspective, SOL looks similar to ETH and BTC, with Shorts piling in over the last 24 hours, but this is not alarming enough. However, from a TA perspective, SOL looks like it’s due for more downside. We see $52 as a minimum target, with the potential for price to visit $48 also. 

If SOL can reach $48, we would be DCA buyers of SOL at this price, while we would become aggressive DCA buyers of SOL sub $44. 

If SOL retests the underside of the horizontal support/now turned resistance at $56.40, that may provide a trading opportunity to Short SOL into the underside of that horizontal resistance. But for now, we wait and remain patient.