Solana (SOL) has been trading within a horizontal channel on the four-hour chart since September. During the weekend, SOL broke above this channel, reaching a peak of $140, only to retrace back to the channel, indicating a fakeout.
A fakeout occurs when an asset breaks out of its trend but quickly reverses. This fakeout misled traders, especially those who entered positions expecting a sustained breakout, leading them to incur losses.
Since the fakeout, SOL has seen increased derivatives market activity, with its futures open interest rising to $2.12 billion. Despite the recent price decline, SOL futures traders maintain a bullish sentiment, with the funding rate mostly positive.
Currently, SOL’s technical outlook suggests a potential extended decline. The Elder-Ray Index, indicating seller dominance, and the Directional Movement Index, showing negative momentum, both point to a bearish trend.
If the downtrend continues, SOL’s price could fall below its support level at $126.46, dropping an additional 13% to around $109.64. However, renewed demand could potentially push it toward the resistance level of $161.50.
