Although the price of Solana is showing signs of cooling down from the recent peak of $168, the overall picture still leans towards the buying side. Despite the adjustment to the $160 level, three important indicators suggest this is merely a pause rather than a collapse.
The funding rate remains positive, reflecting optimistic sentiment
The funding rate of Solana currently remains positive, indicating that the Long side is dominating the market. Even if the price experiences slight declines, they still have to pay fees to maintain their buying positions, which proves that the majority of the market still expects a price recovery.
There are no signs that the Short side is controlling the market, which indicates that investors are still willing to hold Long positions despite price volatility.
The funding rate is a periodic payment between buyers and sellers in perpetual futures contracts. When the funding rate is positive, the Long side dominates, and they must pay fees to the Short side, indicating that market sentiment still leans towards a bullish trend.
The golden cross between the EMA 20 and EMA 50 confirms the bullish trend
Solana recently witnessed an important signal when the EMA 20 line crossed above the EMA 50 line on the daily chart. This is known as a 'golden cross', a sign often seen in bullish trends, indicating that the short-term momentum of SOL is recovering. However, it is worth noting that this crossover did not occur on a strong green candle, but rather on a red candle with a long wick, which may reflect market hesitation.
Nevertheless, the golden cross still reinforces the hypothesis that the price trend of SOL is shifting upwards, although the current upward momentum may not be stable and carries potential volatility in the short term. This signal suggests that the market may be in an accumulation phase before a more sustainable growth spurt, if other factors continue to support the buying side.
SOL price
Although the price of Solana has dropped to $160, it still holds above the important support area around $158, according to the Fibonacci retracement indicator. This is a useful tool for identifying key support levels in an uptrend. This shows that Solana's bullish structure remains intact and has not been broken.
If Solana can recover and surpass the $168 level, and the funding rate remains positive, the next bullish wave will unfold. In this case, the price of SOL could continue to rise to $179 and even reach $184, as long as market sentiment remains optimistic.
However, there is a notable signal of a pronounced bearish RSI divergence between July 10 and July 14. While the price of SOL made new highs, the RSI created lower highs, indicating that momentum is weakening, even as prices rise. This divergence is an indicator that could lead to price adjustments in the short term, as we are currently witnessing.
Furthermore, the RSI is currently beginning to decline after nearly touching the signal line, further reinforcing the possibility that prices may temporarily cool down.
The RSI indicator is a momentum measurement tool that helps track the strength of buying or selling pressure in the market. Divergence, when the price continues to rise but the RSI declines, often means that the bullish momentum is weakening.
If the RSI bearish divergence continues and the price of SOL drops below the support level of $158, this could lead to a breakdown of the bullish structure. If the adjustment continues, the next support level could be $152 (the Fibonacci level of 0.382) or even $147, a price point that could potentially reverse the bearish trend in the short to medium term.
In summary, while the bullish structure remains intact, the weakening signs from the RSI and divergence could indicate that a short-term correction is something to watch for, and if support levels do not hold, the market may face deeper corrections.