Solana went sideways over the last week or so, but it is worth noting that we are sitting just above the $80 level, which is an area where we have seen support more than once. The market has continued to drift lower over the last couple of months though, and this latest action suggests that we are trying to figure out whether or not we have enough support here to keep the market afloat.
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You can also see that I have drawn a descending triangle on the chart, which coincides quite nicely with the recent action. At this point, if we were to break down below the bottom of the triangle, it would have a potential measured move down to the $40 level. Beyond that, the 50-day EMA has broken down below the 200-day EMA, forming the so-called “death cross.” This is a negative technical indicator as well, so that could have people willing to short the market right away. Because of this, I think it is possible that we see this market continue to attract more short-sellers.
Even if we were to rally at this point, I think this is a market that will continue to see plenty of resistance based upon the downtrend line, and the $100 level that recently offered a significant amount of resistance. Ultimately, I think that barrier is going to be difficult to overcome, so I would be a seller of rallies at this point. I just do not see a scenario in which Solana will take off to the upside easily at this point. This is especially true with the Federal Reserve tightening monetary policy because it will take money out of risk assets, thereby working against the idea of putting money in not only Bitcoin but all of these other altcoins as well.
On the breakdown, I would be very aggressive with my shorts, because Solana will get absolutely hammered if both Bitcoin and Ethereum start to lose value. Remember, the further you go out on the risk spectrum, the more dangerous it is to own the coin and Solana is certainly out there. Yes, a lot of people like the project but quite frankly, none of these projects are really being used at the moment, so you cannot read too much into what could be, rather you need to trade what is.
