Solana
Solana Indicators Show Low Demand – Should You Be Worried?
- Solana has broken out of an imbalance on the daily chart and could retest it as a support zone.
- The momentum and price action indicated that the bulls were in control of the market.
Solana [SOL] has seen an increase in trading volume of non-fungible tokens. A recent AMBCrypto Report revealed that Solana-based NFT volume increased 30% in the 24 hours prior to publication, but its monthly volume was still down 57% compared to April.
Technical analysis of the token showed that a target of $200 was achievable. The bullish outlook remained strong, but volume indicators continued to cast slight doubt on the breakout.
The incongruence of volume indicators
Source: SOL/USDT on TradingView
In a previous price analysis, AMBCrypto rated that the OBV had not exceeded local resistance despite the price increase. The Fibonacci extension levels at $236 and $279 are the next targets, but the lack of upside follow-through could be a sign of weakness.
Trading volume did not increase despite breaking a six-week resistance zone. The CMF fell towards -0.05. Its reading of -0.03 at press time showed no significant capital flows into or out of the SOL market.
This was concerning because, ideally, a breakout should be accompanied by increased buying pressure.
Therefore, SOL could once again fall below the $160 zone. This was not likely at press time, considering momentum indicators and the price action itself. The Directional Movement Index showed a strong upward trend with the +DI and ADX above the 20 mark.
Spot demand is another reason why Solana should continue its rally
Source: Coinanalyze
The OBV and CMF volume indicators gave traders pause, but the Spot CVD and Open Interest highlighted a bullish conviction among market participants. OI quickly during the breakout to indicate increased bullish speculation.
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The funding rate has also become more positive, reflecting an increasing number of traders choosing to go long. The uptrend in spot CVD was a sign of real demand behind the rally.
Therefore, the $160 support zone would likely be defended if retested and the rally is expected to continue.
Disclaimer: The information presented does not constitute financial, investment, business or other advice and represents the opinion of the author only.
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