The recent bearish market movement on Solana could signal a bullish breakout for SOL. Solana network native token, SOL reached a 14-day high of $139 before pulling back to $130 —- as a lot of crypto traders placed short positions on the token. However, new data some key data, and market trends point to a potential upside for SOL in the long term.

Sol Price Shows Good Resilience

Last week Friday, Sep 13, the SOL token surged to $139, building on its solid $120 rally earlier that week. Although the recent increase in SOL price was due to certain macroeconomic factors, like inflation reports and strong labor market data. Solana’s double-digit growth from $120 up to $139 in just a week outperformed other major assets like BTC and ETH. This showcases SOL’s strength among the top 5 cryptocurrencies.

However, the price retraced back to $129 over the weekend, which is a 5% decrease. Solana’s overall performance remains strong. The pullback below the $130 price level shows the overall market caution ahead of the U.S. Fed decision this week. However, the little drop in price does not indicate a long-term bearish market movement.

Short Interest in Solana Cools Down 

According to data from Coinalyze, traders have taken $1.2 million in short positions on Solana, betting on a potential price decline. This data, available on Coinalyze, shows that the bulls have completely dominated the short traders, this could set the stage for a bullish breakout through the current short squeeze.

With $1.2 million in short contracts and $2.1 million in long positions, the difference of $1 million in favor of bulls is significant. This imbalance may result in short traders closing their positions if Solana’s price holds key support levels, driving rapid price increases as demand grows.

Source: Coinalyze Federal Reserve Decision: A Key Catalyst for Solana

The upcoming U.S. Federal Reserve’s interest rate release is a key factor influencing the current crypto market sentiment.  A lot of financial analysts believe the Fed will cut interest rates — This historically benefits high-risk assets like crypto. With a rate cut investors’ interest could be renewed in Solana, and this can drive its price toward the $150 resistance level.

At $130 and $120 price levels, $SOL has some key support levels. If bull traders can defend this level, the crypto market could see a wave of new buying activity on Solana. This scenario will likely play out with a positive upcoming Federal Reserve decision and other macroeconomic conditions.

Technical Indicators Support a Bullish Breakout

Looking at the Solana price action from a technical point of view. Solana is holding above two support levels, the $130 and the critical $120 price level. The Parabolic SAR indicator points to a potential trend reversal, with the current bearish sentiment slowing down. Furthermore, with resistance at $159, Solana has ample room to grow if conditions align for a breakout.

While short-term bearish pressure exists, the broader market conditions, institutional interest, and the potential for a Federal Reserve rate cut create a solid foundation for long-term growth in Solana. You can check the latest data on SOL perpetual futures contracts on Coinglass.

Conclusion: Solana’s Bullish Potential

Despite the presence of $150 million in short contracts, Solana has the potential to surprise the market with a bullish reversal. Key support at $120 is crucial, and if the upcoming Federal Reserve meeting results in a rate cut, this could reignite buying momentum. With strong technical support and the possibility of a short squeeze, Solana is well-positioned for a bullish breakout soon.

Be sure to keep an eye on the markets over the next few days as Solana could transition from its current consolidation phase to a strong upward trend.

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