Solana price rebounded after finding support near $205.41 on Tuesday. On-chain data shows signs of recovery as SOL's daily trading volume increases and the long/short ratio reaches its highest level in a month. The bullish theory will be invalidated if the daily candlestick falls below $205.41.
Solana (SOL) price recovered on Wednesday, finding support around the $205 level after falling sharply earlier in the week. On-chain data suggests a near-term rally as SOL’s daily trading volume increases and the long/short ratio reaches its highest level in a month.
Solana’s technical outlook, on-chain data suggests recovery
Solana price reached a new high (ATH) of $264.39 on November 22nd and has since corrected. SOL declined over 16% over the next 17 days, retesting the 61.80% Fibonacci retracement level from the August low of $110 to the ATH at $205.41.
This level is roughly in line with the 50-day exponential moving average (EMA) of $213.12 and the daily support level of $213.12, making this area a key reversal zone. As of writing on Wednesday, SOL has rebounded and is trading around $220.
If $205.41 continues to hold as support, the altcoin could move higher to retest the December 6th high of $247.
However, the relative strength index (RSI) on the daily chart remained at 46, below the neutral level of 50, suggesting trader indecision. The RSI needs to trade above the neutral level for the bullish momentum to resume. These developments will provide a tailwind for economic recovery.
SOL/USDT daily chart
Meanwhile, Solana's on-chain metrics are positive. Data from crypto intelligence tracker DefiLlama shows that trader interest and liquidity in Solana Chain has recently surged. Daily volume rose from $2.92 billion on Saturday to $5.99 billion on Wednesday, the highest level since Nov. 20.
SOL daily trading volume chart. Source: Defilama
According to Coinglass data, SOL's long-short ratio was 1.03, the highest level this month. This ratio reflects bullish sentiment in the market, with numbers above 1 suggesting more traders expect altcoin prices to rise, confirming Solana's bullish outlook. are.
SOL long/short ratio chart. Source: Coinglass
However, if the SOL daily candlestick closes below the $205.41 support level, the decline will resume to retest the psychologically important level of $200.
