Solana (SOL) has been grappling with a persistent price decline over the past few weeks amid the pullback in the broader cryptocurrency market. It currently trades at $218.76, noting an 8% price drop over the past seven days.

Amid ongoing selloffs and low buying interest, SOL faces mounting pressure that could push its price below the critical $200 threshold in the near term. This analysis explains why this may be possible.

Solana Sees Spike in Bearish Pressure

On a daily chart, Solana’s price has been moving within a descending channel since November 23. This channel is formed when an asset’s price moves between two parallel downward-sloping trendlines, indicating a bearish trend. It suggests that the price is experiencing lower highs and lower lows, reflecting sustained selling pressure. 

The upper line of this channel represents resistance, while the lower trend line is a support level. In SOL’s case, it has faced resistance at $230.17 and has found support at the $200.60 price level. 

Moreover, the decline in SOL’s value over the past few weeks has caused it to break below its 20-day Exponential Moving Average (EMA). This moving average measures an asset’s average price over the past 20 days, with more weight given to recent prices.

When an asset’s price breaks below the 20-day EMA, it signals a shift to bearish momentum, indicating that sellers are gaining control. Following the break, the 20-day EMA often acts as a resistance level, as attempts to rise above it may face selling pressure from traders viewing it as a barrier.

In SOL’s case, this barrier is formed at $227, which its price has struggled to breach in the past six days. 

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Author: Abiodun Oladokun