Tracking the Market
The Hunt for Solana
Are we seeing a reversal in SOL price? Is this the bottom? Or is it yet another relief rally?
Wait! Wrong Solana tracker… that is the World of Solana NFT! We want this one…
Let's unpack this a bit. Solana opened on May 9th at $75 and over the course of three days it sold off with a low of $37 on May 12th. During that time the volume spiked from a 7-day average of 416k to over 1.1M traded on May 9th and peaking over 2M traded on May 11th and 12th.
Not all volume is the same... so we need to dive deeper. On May 11th the daily candle opened at $66.90, had a high of $68.46, a low of $43.31, and closed at $50.88. On May 12th the daily candle opened at $50.91, had a high of $54.55, a low of $37.49, and closed at $44.73.
Huge volume uptick during these days and a battle was underway to see if price could be supported or not with swings of $23 on the 11th and $13 on the 12th, with each day ultimately closing lower. There was a LOT of buying support on these days and yet the sellers won out on both.
Fast forward a month to June 7 - June 13 and we saw something similar occur. Volume picked up again, although this time the trailing 7-day volume was 917k so we were already seeing elevated volume while price was declining. For those of you unfamiliar with how to think about price/volume its pretty straight forward and follows the principles of inertia, an object in motion tends to stay in motion unless acted upon by an equal and opposite force... so think of a ball rolling down a hill, price declining with increasing volume (speed) it's going to take something pretty powerful to stop that momentum. Not good.
I've drawn a couple of lines on here to be mindful of, the first one I want to call out is the black line over the volume bars showing a very clear upward trend of increasing volume and a very clear downward trend for the price. However, since bottoming around $25 SOL we have seen daily closing prices heading upwards and the trending volume is increasing. Could this be the equal and opposite force needed to propel SOL back upwards or at least quell the blood flow?
We have a key Fibonnaci line at $37.72 that I'd feel more comfortable if we could close above that for at least a day and preferably three. Yesterday, we crossed it with a high of $39.16, but closed underneath at $36.41. Failing at key points of support/resistance is a very strong indicator that the recent trending price is heading the other way. Imagine being in a pool with a tarp laid on top if you don't have enough force to get your head above water and hold the pressure of the tarp you are going to drown.
We are going to find out in the next 24-72 hours whether the recent volume has enough force to hold SOL above that water line or fail and likely head toward the OTHER Fibonnaci line drawn in red at $23.31. The volatility of SOL is still in a concerning area to get too bullish mind you as we are seeing the daily price volume range between $5 - $8 swings, which on an asset that is pricing between $26 - $39 those are ~20% price swings daily.
That kind of volatility coupled with the downward trending price and continual failure to bludgeon the downgoing leaves me skeptical that this is a trend reversal and I'll continue to short the green days and profit from the decline until further notice.
Thanks for stopping by The Metaverse Illuminated, I trust this edition has brought more to light for you. Remember, you call the shots, take what works for you, discard the rest.
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