Sol price drops 37%: What does it mean?

Solana (SOL) has seen a massive 37% price decline over the past quarter. This period was marked by the formation of a falling wedge pattern on the daily chart, which typically signals a possible trend reversal.

SOL found key support in the $127-$131 range, pushing it above $154. However, resistance from the 20- and 50-day exponential moving averages (EMAs) at $140 and $146, respectively, hampered further gains.

Despite multiple tests, SOL has shown resilience around the 200-day EMA, a key level that has not been revisited in nine months. Historically, a break below this key level has led to a long-term downtrend that lasted 1.5 years starting in January 2022. The 200-day EMA is aligned with the $127-$131 support range, suggesting a recovery could be in the near term if this support holds.

The $127 to $131 support level should now be watched as it could offer a potential entry point for buying.

Conversely, the $154 resistance level should be viewed as a strategic exit point. If SOL closes above $154, it could signal a move toward $172.

On the other hand, a close below the $127 to $131 support level could signal an impending long-term downtrend. The Moving Average Convergence Divergence (MACD) indicator still reflects bearish sentiment, and any breakout would depend on whether the MACD line rises above zero.

Bearish Sentiment and Funding Rate

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