Solana (SOL) is showing signs of a potential 13% decline after a fake breakout from a horizontal channel earlier this month. Despite briefly surpassing its resistance level, the price quickly reversed, signaling a false breakout and raising concerns among traders.

Since the beginning of September, SOL has been trading in a horizontal range, with $138.12 acting as resistance. On September 13, the altcoin broke above this level, peaking at $139.78. However, the price reversed and fell back into the channel, reflecting a classic “fakeout” scenario, which occurs when an asset breaks out of its trend but fails to sustain the momentum.

The aftermath of the fakeout has resulted in increased derivatives market activity for Solana. Futures open interest for SOL rose 3% to $2.12 billion since September 13, indicating heightened market engagement. Interestingly, despite the price reversal, bullish sentiment remains. Coinglass data shows the funding rate has stayed positive at 0.0062%, suggesting traders are continuing to take long positions, anticipating another rally rather than a further decline.

However, SOL’s technical outlook is showing bearish signals. The Elder-Ray Index, which tracks the balance of power between buyers and sellers, has been negative since September 15, suggesting sellers are firmly in control. The Directional Movement Index (DMI) also confirms this, with the negative directional indicator outpacing the positive, reflecting downward momentum.

If the downtrend persists, SOL could break below its support at $126.46 and drop as low as $109.64. However, a successful retest of the resistance level could push the altcoin toward $161.50, offering a potential upside for traders still bullish on SOL.

Source: This Is Why Solana’s (SOL) Fakeout Could Trigger a 13% Price Drop