- Solana has rebounded strongly from its demand zone, aligning with our analysis and creating opportunities for high risk-to-reward trades
- Liquidity above the current supply zone suggests potential traps—caution and break-even strategies are essential
- Understanding demand/supply zones and market structure is critical for navigating Solana’s movements this week
In yesterday’s analysis, we discussed how a false resistance could lure traders into the wrong move, while a demand zone (an area where buying interest is high) below offered a better opportunity.
This is what I said yesterday:
“Now, Solana appears to be playing a new game. It has left liquidity above and is seemingly reacting to a “fake” resistance level.
In my view, this is a classic setup to draw in retail traders who might jump into positions too early. By creating a false sense of direction, smart money traders accumulate liquidity before triggering the real move.”
As expected, Solana’s price played out this scenario beautifully.
What Happened?
The price feigned a reaction at the resistance, tricking retail traders into taking positions, which allowed the market to accumulate liquidity. Then, Solana moved downward, targeting the demand zone we identified.
Once it hit the demand, the price rebounded sharply upward, heading toward liquidity resting above.
If you followed the analysis, you could have captured a 1:20 risk-to-reward trade, targeting the supply zone from the last bearish impulse. Well done, legends!
Understanding Demand Zones
For those new to this, a demand zone is an area where the market typically shows strong buying activity, often characterized by sharp upward movements after the zone is tested. These zones can act as a foundation for placing high-probability trades.
What’s Next for Solana?
The supply zone we marked yesterday is still valid for potential selling opportunities. However, a small pocket of liquidity rests above it, which the price might aim to grab first.
Here’s how to approach this scenario:
- Use the break-even technique: If the price begins reacting at the supply, move your stop-loss to your entry point. This way, you protect your position from losses if the market moves against you.
- Be cautious and wait for confirmation before entering a trade.
For those unfamiliar, break-even is a risk management strategy where you adjust your stop-loss to ensure no loss, allowing for a “free trade” as the market unfolds.
The Golden Rule: No Certainties in Trading
While the outlined scenarios are based on solid principles like liquidity, market structure, and supply/demand, remember that the market can behave unpredictably. Stay adaptable and prioritize risk management.
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Let’s see how Solana moves from here—stay tuned for the next analysis. And as always, trade smart, legends! 🚀
Disclaimer: The information provided in this article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. Any actions you take based on the information provided are solely at your own risk. We are not responsible for any financial losses, damages, or consequences resulting from your use of this content. Always conduct your own research and consult a qualified financial advisor before making any investment decisions.
