Despite a 6% increase in the past 7 days, Solana’s (SOL) price has declined by 17% since the start of the month, leaving market speculators indecisive. The cryptocurrency’s price movement has been characterized by a thwarted uptrend, with its 20-, 50-, and 100-day exponential moving averages (EMAs) converging tightly, indicating a diminishing momentum disparity across different timeframes.
Lack of Directional Bias
The Average Directional Index (ADX) has dropped to low levels on the SOL daily chart, implying a lack of a strong directional bias in the market. This is often correlated with reduced market volatility, and in Solana’s case, may signal a transition from a trending phase to consolidation or range-bound converse. The ADX has consistently dropped from 26 on August 6 to 19 at the time of writing, below the 20-threshold, suggesting Solana may be restricted to less dramatic price movements in the near term.
Momentum Indicators Suggest Uptrend Continuation
In a low ADX environment, range-bound or mean-reversion strategies become more relevant. On the daily chart, SOL/USDT has printed successive positive Moving Average Convergence Divergence (MACD) histograms for the past 5 days. The MACD line has recently crossed into positive territory, although the signal line remains in negative territory. This suggests that bullish momentum has been reasserting itself gradually, but the longer-term trend is still catching up.
Breakout from Descending Channel
SOL/USDT has broken out of a descending channel, signaling the end of a correction pattern that persisted over recent weeks and the onset of an upward trend. This breakout is confirmed by increasing buying pressure in the form of candles outside the upper channel bounds.
On-Chain Metrics Indicate Slowing Community Usage
On the network level, Solana’s total transaction fees are currently near the lowest levels seen in early May. This decline in daily transaction fees suggests reduced activity on the network due to fizzling enthusiasm around Solana-based meme coins like Dogwifhat, Popcat, and Bonk, whose popularity has been influential to SOL’s recent success in the altcoin market.
Can Solana Reach $200?
Despite the waning momentum, Solana’s price could still potentially reach $200. The cryptocurrency’s ability to break out of the descending channel and the reassertion of bullish momentum on the MACD indicator suggest that the uptrend may continue. However, the low ADX reading and declining on-chain activity may limit the price movement in the near term. A sustained increase in buying pressure and a reversal of the declining trend in on-chain activity could be necessary for Solana to reach the $200 mark.
Key Levels to Watch
- Resistance: $45, $50, $55
- Support: $35, $30, $25
- Breakout level: $42 (upper channel bound)
Conclusion
Solana’s waning momentum has led to indecisiveness among market speculators. While the cryptocurrency’s price movement has been characterized by a thwarted uptrend, the reassertion of bullish momentum on the MACD indicator and the breakout from the descending channel suggest that the uptrend may continue. However, the low ADX reading and declining on-chain activity may limit the price movement in the near term. A sustained increase in buying pressure and a reversal of the declining trend in on-chain activity could be necessary for Solana to reach the $200 mark.
disclaimer
Readers are encouraged to conduct their own research and consult with a financial professional before making any investment decisions based on this content.
