- Solana is at a critical resistance level, but a breakout above $240 could trigger a short squeeze, sending prices toward $265.
- Short traders hold heavy positions at key price points, but if bulls push higher, forced liquidations could drive a strong rally.
Solana has witnessed price drawback in recent times, currently trading at a low of $198 after a 5.5% decline in the last 24 hours. The broader crypto market downturn has its effect on SOL, although on-chain analytics suggest expected long-term accumulation.
However, there’s a struggle between bullish hodlers and aggressive short traders, which will decide the SOL’s next move.
With $100 million worth of SOL flowing out of exchanges, buying pressure is building. But at the same time, short traders have heavily leveraged positions around key price zones, increasing the risk of a short squeeze or a deeper retracement.
BitVerse CEO Hunter Horsley said “market drawdown” is the right moment for investors to buy the dip.
“Admire the investors who bought Solana at $12 in late 2022? Legendary investments are often made in market drawdowns—when others have fear.”
Short Sellers Under Pressure as SOL Approaches Key Resistance
Market data shows that short traders are overleveraged at $236.30, holding $175.5 million in short positions. Another critical level is $223, where bulls have built $46 million in long positions. This imbalance suggests that if SOL climbs above resistance zones, it could force short sellers to liquidate, triggering a sharp price rally.
The symmetrical triangle formation observed in SOL’s price charts indicates tightening volatility. A breakout above $240 could drive a surge toward $265, where $217 million in short positions** exist, making this a critical battleground. If momentum shifts in favor of bulls, the resulting liquidation could send prices soaring past $275, igniting a bullish continuation.
Technical Indicators Suggest Potential for a Breakout
Despite recent downside pressure, several indicators signal a potential bullish reversal. The Relative Strength Index (RSI) sits near oversold territory, hinting at a possible bounce if buying pressure increases. SOL currently trades close to its “lower Bollinger Band,” a pattern that historically precedes price recovery.
However, the 50 Days Simple Moving Average (SMA) retains below the $200-day SMA, which indicates a medium-term bearish trend. It also suggests that any recovery could be short-lived unless sustained by solid buying momentum.
Crypto analyst Ali Chart in a recent tweet on X, recognized a bullish buy signal, not minding the present price crisis.
The coming days will be important for Solana’s price stability, at least for Q1 of 2025. If bulls push past the $240 resistance, shot sellers may be drawn into liquidations. This will ultimately lead to a rally beyond $265 and beyond.
However, if selling pressure persists and SOL breaks below $220, it risks testing $195.95, with a potential drop to $190 if support fails.
Highlighted Crypto News Today:
PEPE Coin Drops 80% Could a Rebound Be Coming Soon?
