Solana retests $140 amid 25% rebound: can bulls recover?

Solana has rallied 25% from its recent four-month low of $110 after an impressive recovery, but market data is sending mixed signals as bulls look to extend the recovery push.

During the recent market-wide bloodbath that sent Bitcoin (BTC) below $50,000 for the first time in nearly six months, Solana (SOL) witnessed a turbulent period, recording a 40% drop in the past eight days.

The last time Solana experienced a similar daily losing streak was in March 2023, which caused it to drop to $16. However, after the recent decline, recent market activity suggests that Solana is on the path to recovery.

Solana retests $140

The daily chart shows Solana recovering from the $140 level early this morning before rallying to $144. This recovery is indicative of a strong uptrend, but it has faced minor corrections. Solana is up 7% in the last 24 hours and is trading at $140 at the time of writing.

SOL 1D chart – August 6 | Source: crypto.news

Market analyst Kaleo confirmed Solana’s strength against Bitcoin despite the crypto engineering that first brought about the recent rally. The SOL/BTC ratio shows that Solana is outperforming Bitcoin in the current recovery phase.

Kaleo notes that Solana’s strength against Bitcoin is impressive, with the SOL/BTC ratio poised for new highs. He suggests that a ratio of 0.01 is a strong target.

Additionally, the daily Accumulation/Distribution metric on the daily SOL chart is trending upwards. This suggests that more investors are accumulating Solana, which is a positive sign for potential upward momentum, with the metric currently showing 297.43 million SOL.

Bearish momentum continues to dominate

Meanwhile, the Directional Movement Index (DMI) is offering a mixed picture. The positive directional indicator (+DI) has fallen to 15.08, indicating a decrease in buying pressure. In contrast, the negative directional indicator (-DI) has risen to 35.83, confirming that the bears are continuing their selling pressure.

Specifically, the Average Directional Index (ADX), which measures trend strength, is at 28. A high ADX above 25 indicates a strong trend, meaning that bearish pressure continues to outpace recent bullish momentum.

Trader JohnnyB believes Solana’s decline may not be over yet. He sees another drop before a full recovery. He sees this potential drop as a “generational buying opportunity,” meaning the upcoming drop could present a viable entry point for long-term investors.

Looking ahead, Solana’s current positioning confirms that its near-term future deserves cautious optimism. The accumulation phase indicated by the A/D metric suggests that investors are confident in Solana’s recovery.

However, the positions of the DMI indicators show that the bullish momentum has not yet outpaced the selling pressure.

Solana has already recovered from the $132.68 level, flipping it from resistance to support. If the bullish momentum picks up, the bulls could stage a rally towards the 20-day SMA at $167.07. However, a weakening bullish pressure could revisit the $132 support, which if broken, could bring the $124.85 defense into the picture.