Solana (SOL) is showing bearish signs as it trades around $132 on Tuesday, after being rejected at the previously broken uptrend line at $139.80 last week. This bearish outlook is reinforced by a decline in developer activity and a long-to-short ratio below one.
Solana Price Shows Signs of Weakness
On Friday, Solana retested the broken uptrend line around $139.80 but was rejected. The price fell 5.3% over the next two days and is currently trading at $131.91.
If this trend line and the 50-day EMA at $141.43 continue to act as resistance, SOL could continue to decline another 9% towards the daily support around $120.91.
This bearish prediction is reinforced by technical indicators such as the RSI and the Awesome Oscillator (AO) on the daily chart, which are currently trading below the neutrality levels of 50 and 0 respectively. Both momentum indicators show increasing strength of the bears and point to a downtrend.
SOL/USDT Daily Chart
Data from Coinglass also supports Solana’s bearish outlook. SOL’s long-to-short ratio is currently at 0.88 and has fallen below one since Friday, indicating that many traders are anticipating a drop in price.
SOL long-short ratio chart
Furthermore, Santiment’s Developer Activity Index reflects this decline. The index, which tracks project development activity on GitHub, fell sharply from 176.95 on Sunday to 166 on Tuesday, in a downward trend since early September. Solana’s low level of developer activity could undermine confidence in its blockchain projects, which in turn could negatively impact market sentiment.
SOL Development Activity Chart
While the bearish outlook is supported by technical analysis and on-chain data, if Solana’s daily candle closes above $141.43, the 50-day EMA could invalidate the bearish prediction by creating a higher high on the daily timeframe. This development could push SOL’s price up 5% to retest the August 28 high of $149.30.
Source: https://tapchibitcoin.io/solana-sol-price-and-on-chain-indicators-for-signs-of-weakness.html
