Solana prices expected to see a bounce from this level

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• The 4-hour market structure of Solana was bearish but the risk-to-reward was reasonable. 
• The Fibonacci retracement levels helped determine where the bulls would be invalidated.

Solana [SOL] presented a risky buying opportunity for lower timeframe traders. Its trend and market structure were bearish on the higher timeframes, but analysis of the 4-hour and 1-hour charts showed that a bounce in prices was possible.

Read Solana’s [SOL] Price Prediction 2023-24

On 23 June Bitcoin [BTC] managed to reach $31.3k, the highest that BTC prices have reached in 2023. The previous local high was at $31k in April. This suggested bullish intent, but the price action of the past week suggested that a pullback cannot be ruled out. This made the long setup presented below riskier, and traders must be ready to cut the trade upon invalidation.

The short-term Solana trend was on the verge of shifting bearish

Source: SOL/USDT on TradingView

The 4-hour structure was bearish. After SOL moved to the $17.75 level, it formed a higher low at $16.16 on 23 June. Since then, the price has sunk below, reaching $15.89 on 27 June. A series of lower highs were also registered.

This showed SOL has embarked on a downtrend. The Directional Movement Index showed the -DI (red) had a value of 25 and the ADX (yellow) was at 19.54. ADX above 20 would signal a strong bearish trend. Meanwhile, the RSI was also below neutral 50, showing downward momentum. The CMF was falling but showed significant capital inflow with a reading of +0.06.

A set of Fibonacci retracement levels was plotted based on SOL’s bounce from $12.8 to $17.75. It showed the 50% retracement level was at $15.28- which represented a good opportunity to enter long positions, with invalidation below $14.88. Conservatively it is shown to be at the 61.8% level above. To the north, the bearish H4 order block at $18.7 lined up well with the 23.6% extension level at $18.92.

Coinalyze data showed rising demand but sentiment remained bearish

Source: Coinalyze

On 26 June, when the price of Solana fell from $17.1 to $16.08, the Open Interest raced higher. The OI gained close to $20 million, which showed enormous short-selling and firm bearish sentiment in the market a couple of days ago.

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Yet, the spot CVD has begun to trend upward. Over the past 24 hours, the CVD rose slightly, while the OI remained flat despite short-term volatility. Taken together, it showed that market sentiment remained in favor of the sellers.