Solana, buying pressure returns... The decisive point is the 5.41 million SOL sell wall

▲ Solana (SOL)/AI-generated image

Solana (SOL) has formed a reversal structure, overcoming weeks of selling pressure, and the breakthrough of a 5.41 million SOL sell wall has emerged as the biggest turning point for a potential 14% further increase.

According to crypto media outlet BeInCrypto on May 7 (local time), Solana was trading around $90, showing a bottoming formation structure on its daily chart. The recent trend is unfolding as an 11% rebound, an inverse head and shoulders pattern, and a recovery in spot demand, with the breakthrough of a large supply zone above the price being presented as a key variable determining a 14% upside scenario.

Solana has been forming an inverse head and shoulders structure on its daily chart since late March. The right shoulder was formed in late April, and Solana has rebounded approximately 11% from that low, moving towards the neckline, which is the breakout threshold. The 20-day exponential moving average (EMA) is approaching the 50-day EMA, showing the possibility of a bullish cross. However, both short-term EMAs are still below the 100-day EMA, and the 100-day EMA is suppressing the upward trend at approximately $93.91.

On-chain flows have also shifted from selling to accumulation. According to Glassnode data, the change in exchange net position has turned to a buying dominance. From April 22 to May 1, exchange inflows were strong, with approximately 1.4 million SOL moving to exchanges on some days. However, SOL moved out of exchanges for 5 consecutive trading days until May 6, and a net outflow of 543,961 SOL was recorded on the most recent day. This suggests that buyers may be absorbing supply faster than sellers are releasing it.

However, the first major resistance lies directly above. Glassnode's acquisition price distribution heatmap shows that approximately 5.41 million SOL are concentrated in a narrow range immediately above the current price. This range has historically acted as a resistance level, and it is a price point where holders who have reached their breakeven point may sell amidst a bullish trend.

In terms of price levels, Solana is currently battling at the Fibonacci 0.618 retracement level of $90.03. Reclaiming this level would open up the Fibonacci 0.786 retracement level of $92.41, which overlaps with the 5.41 million SOL acquisition price concentration zone between $91.70 and $92.43. Above that, the 100-day EMA at $93.91 and the inverse head and shoulders neckline at $96.95 are successively positioned. A decisive break above $96.95 would activate the pattern, and the measured target price is presented as $111, a 14.45% increase.

Conversely, if it fails to hold above $90.03, $86.69 and $84.63 are presented as the next downside levels. Losing the right shoulder low of $81.29 would weaken the credibility of the entire current reversal pattern. BeInCrypto stated that while the shift to net exchange outflow and chart structure lean towards an uptrend, the 5.41 million SOL supply zone and the 100-day EMA still remain above the uptrend.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*