- Solana has breached an imbalance on the daily chart and could retest it as a support zone.
- The momentum and price action signaled bulls were in control of the market.
Solana [SOL] saw a spike in the non-fungible token trading volume. A recent AMBCrypto report revealed that the Solana-based NFT volume increased 30% in the 24 hours that preceded press time, but that its month-to-month volume was still down 57% compared to April.
Technical analysis of the token showed that a $200 target was feasible. The bullish outlook remained strong, but the volume indicators continued to cast a slight doubt on the breakout.
The incongruence of the volume indicators
Source: SOL/USDT on TradingView
In a previous price analysis, AMBCrypto noted that the OBV had not made a move past the local resistance despite the price rally. The Fibonacci extension levels at $236 and $279 are the next targets, but the lack of a bullish follow-through could be a sign of weakness.
The trading volume did not surge higher despite the break of a six-week resistance zone. The CMF sunk toward -0.05. Its reading of -0.03 at press time showed no significant capital flow into or out of the SOL market.
This was worrying because ideally a breakout should be accompanied by increased buying pressure.
Therefore, SOL might sink below the $160 zone again. It was not likely at press time, given the momentum indicators and the price action itself. The Directional Movement Index showed a strong uptrend with both the +DI and ADX above the 20 mark.
Spot demand was another reason why Solana is expected to continue its rally
Source: Coinalyze
The OBV and the CMF volume indicators gave traders a pause, but the spot CVD and the Open Interest highlighted bullish conviction amongst market participants. The OI swiftly during the breakout to indicate increased bullish speculation.
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The funding rate was also growing more positive to showcase an increased number of traders opting to go long. The spot CVD’s uptrend was a sign of genuine demand behind the rally.
Therefore, the $160 support zone would likely be defended in the event of a retest and the rally is expected to continue.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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