Solana (SOL) Price: Is a Correction Imminent?
Solana (SOL) Rally Faces Headwinds: Correction Risks
Solana's price has recently climbed above $220, marking a 5.3% increase over the past week. A significant portion of this surge occurred in the last three days, with SOL jumping from $200 to $220 – a 10% rise. While this appears bullish on the surface, historical patterns and emerging indicators suggest caution.
Solana has struggled to sustain rallies above the $200 mark. Several warning signs are reappearing, hinting that this current upswing might be short-lived.
Three Reasons Why Solana's Price Could Correct:
1. Rising Profit-Taking Pressure
Solana's Net Unrealized Profit/Loss (NUPL) is flashing a warning. On September 9, the NUPL reached 0.321, nearing its highest level in a month. A similar peak on August 28 (NUPL of 0.329) was followed by an approximate 8% SOL correction. High NUPL values often precede profit-taking as holders capitalize on gains.
While not a guaranteed sell-off, the elevated NUPL signals increased risk of profit-booking.
2. Weakening Buying Pressure
Exchange net position change reveals a potential shift in sentiment. On September 6, with Solana around $200, net outflows were -4.7 million SOL. By September 9, as the price approached $217, outflows dwindled to -758,000 SOL. This represents an 84% decrease in buying pressure over just three days, despite the price increase.
This divergence – weaker outflows coupled with a rising price – suggests that sellers might be entering the market while buyers are slowing down.
3. Bearish Divergence on the Price Chart
A bearish divergence has formed on Solana's price chart. Between August 14 and September 10, the Solana price made a higher high, but the Relative Strength Index (RSI) printed a lower high.
This divergence signals that momentum is waning even as the price increases, indicating rising selling pressure behind the scenes.
Traders should watch the $207 level. A daily close below this could lead to further declines towards $197 and then $189. Conversely, a daily close above $222 would invalidate this bearish outlook.
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