Solana Is Showing Bullish Signs | BITmarkets
Insights Analysis Solana Is Showing Bullish Signs

Solana Is Showing Bullish Signs

August 6, 2024 Analysis
BITmarkets | Solana Is Showing Bullish Signs

Any trader with an active interest in the financial markets has likely observed the sharp sell-off across a wide range of assets, from government bonds to cryptocurrencies, in recent days. While this downturn might initially appear alarming, it's only part of the picture a trader needs to consider when making their next move.

Despite some voices raising concerns about an impending recession, this decline remains within normal market behavior, creating significant opportunities akin to those seen during the 2020 pandemic.

Among the various cryptocurrencies, several have demonstrated resilience, with bullish momentum following yesterday's plunge. Solana stands out as a prime example.

Daily time frame analysis

SOLFirst.1

SOLUSD - 1 Day Time Frame

Since April, this altcoin has been accumulating a substantial volume of sell-side liquidity, so a drop below this level was anticipated. Commercial market participants have thus found enough volume to counter their buy positions from both small and large speculators.

4-hour time frame analysis

SOLSecond.1

SOLUSD - 4 Hour Time Frame

Understanding this market context is crucial for traders, as it sheds light on why the recent decline occurred. Equally important is monitoring further price developments. In Solana's case, the price closed above a key resistance level, represented by the yellow rectangle.

According to market algorithms, this zone will now likely be viewed as support, confirming the bullish setup.

When to buy Solana?

For risk management, a Stop Loss (SL) order could be placed just below the low preceding the formation of this support. There are two key levels for Take Profits (TP): internal and external buy-side liquidity zones.

The price's behavior around the resistance level, marked by the blue rectangle on the weekly time frame, will be critical in managing the trade. If the market reaction to buy orders is negative, it would be prudent to sell off some volume due to the increased risk of a continued bearish move.

This risk might escalate if the price closes below the initial support zone on the four-hour time frame. In such a scenario, the trader should consider reducing their position accordingly.

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