The United States Securities and Exchange Commission (SEC) listed Solana (SOL) among the tokens identified as securities in a court filing against Binance on Monday. As expected, the markets reacted negatively, triggering a 14.8% retracement in Solana’s price to the current levels just above $18.5. The technical set up paints a grim outlook with losses to $10 coming into the picture.
Solana Bulls Fight To Hold $18
SOL has been one of the worst-hit cryptocurrencies in the top 10 global crypto rankings this week. This is because SOL was among the 19 cryptos specified by the SEC as securities in the lawsuits against Binance and Coinbase.
Market participants know that if these tokens are ultimately classified as securities at the end of the lawsuits, they would likely be delisted from US exchanges, and their trade would be severely restricted.
This flipped the market sentiments against these tokens leading to substantial price drops as investors reacted to the news. Solana dropped as much as 10% on Monday and continued the decline on Wednesday.
At the time of writing, SOL is fighting immediate resistance from the 200-day Simple Moving Average (SMA) at $19.53. The bears are battling to pull the smart contracts token below the $18 psychological level.
If they succeed, Solana will drop to revisit the $16 local low. Breaching this level would set the “Ethereum killer” on a free fall collecting the demand side liquidity toward $10. This would bring the total losses to 45%.
SOL/USD Daily Chart
Supporting the gloomy outlook for SOL was the downward facing moving averages. Note that these chart overlay indicators had just sent a call to sell Solana on the daily chart. This happened on Tuesday when the fast-moving 50-day SMA crossed below the slow-moving 100-day SMA as shown on the chart above.
Solana’s bearish thesis was also supported by downward movement of the Moving Average Convergence Divergence (MACD) indicator below the zero line in the negative region. Moreover, the position of the Relative Strength Index (RSI) at 38 close to the overbought region reinforced the bears’ grip on Solana.
On the upside, things may go well for bulls if the price turns up from the current level to produce a daily candlestick above the 100-day SMA at $21. This would confirm a bullish breakout with the next line of resistance emerging from the $22 or $24 psychological levels. Higher than that, a move toward the $26 range high would be the next logical move, bringing the total gains to 40%.
