Solana Eyes Breakout Amid Bullish Technical Signals
Key Takeaways
- Solana (SOL) is once again testing the resistance zone around $190 USD.
- A classic “cup and handle” chart pattern suggests a potential continuation of the upward trend.
- Short positions worth over $7.9 million USD have been liquidated.
- Derivatives data shows rising open interest and positive funding rates.
- Spot volume is declining while leveraged positions are increasing.
Solana on the Verge of a Breakout: What’s Behind It?
Solana (SOL) is currently forming a technical pattern familiar to traders: the “cup and handle.” This chart formation often signals an upcoming upward move. The price is currently hovering in a critical zone between $180 and $210 USD. A breakout above this level could unlock further potential.
Shorts Under Pressure: Liquidations Driving the Price
In recent days, short positions worth over $7.9 million USD have been closed out. Notably, these liquidations are concentrated in the $185 to $190 USD range. Platforms like Binance and Bybit played a significant role in this. This imbalance can lead to a so-called short squeeze — a sudden price surge caused when short sellers are forced to close their positions.
Derivatives Market Sending Clear Signals
The funding rate — an indicator of whether long or short positions are dominant — is positive. On May 23, it stood at 0.00999%. This means traders are paying premiums to maintain long positions. At the same time, open interest (outstanding contracts) rose by 8.25% to $7.86 billion USD. Options volume also increased by 38.12%. These figures suggest growing confidence that the price could continue to rise.
Declining Spot Volume: A Warning Sign?
Despite bullish signals in the derivatives market, spot market trading volume has dropped by over 30% to $13.99 billion USD. This could indicate fewer real purchases are taking place, and that the price increase is being driven primarily by leveraged positions. Meanwhile, open interest in options fell by 8.40%. Some traders appear to be abandoning hedges and betting on a clear market direction.
Key Technical Levels to Watch
Currently, the SOL price is above the 0.382 Fibonacci level at $183.67 USD. A sustained breakout above this level could pave the way to the next Fibonacci targets at $206.43 and $229.18 USD. However, if the price falls below $183, a pullback toward the $155 USD area is possible. The Relative Strength Index (RSI) is at 54.94 — a neutral reading with potential for movement in either direction.
Our Take
Solana is currently showing a strong bullish setup. The combination of a confirmed chart pattern, rising funding rates, and increasing open interest supports the continuation of the upward trend. The high number of short liquidations adds upward pressure. However, the declining spot volume calls for caution. In the short term, a breakout above $190 USD is likely. In the medium to long term, targets of $206 and $229 USD could be realistic — assuming market sentiment remains positive.
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