Solana Faces Technical Test as Derivatives Turn Cautious Around $120

Key Moments

Institutional Flows Hold While Retail Turns Defensive

Solana (SOL) traded slightly above $120 at press time on Tuesday, extending weakness after a nearly 2% decline on Monday that followed a rejection near $130. The pullback came as derivatives positioning signaled growing downside expectations, even as Exchange Traded Funds (ETFs) tied to SOL continued to attract capital.

Solana-focused ETFs recently posted their weakest weekly inflow of $13.14 million, sharply lower than the $66.55 million seen the previous week. The slowdown pointed to softer institutional participation amid broad volatility in the cryptocurrency market. Nonetheless, the segment showed signs of stabilization, with $2.93 million in fresh inflows recorded on Monday after a net-zero flow on Friday, indicating that demand has not disappeared.

Could Solana bounce back?

Solana hovers near $120 within a descending wedge pattern formed by two converging trendlines on the daily chart. The reversal from $130 on Monday, which led to an almost 2% decline, risks a steeper correction toward the support trendline connecting the… pic.twitter.com/sWjc5f2kxP

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Derivatives Data Show Rising Open Interest and Bearish Tilt

While ETF flows remained positive, activity in the derivatives market reflected a more cautious tone among traders. Data from CoinGlass indicated that SOL futures Open Interest – the total notional value of open contracts – rose to $7.68 billion on Monday, up from $7.54 billion the previous day. The increase suggested that new capital continued to enter Solana-linked derivatives.

However, the composition of that positioning leaned bearish. The long-to-short ratio showed that short exposure accounted for 52.49% of active futures positions, up from 49.85% over the previous 24 hours. This shift implied that part of the new inflows into futures had been directed toward building short positions rather than bullish bets.

Key Derivatives Metrics

Technical Setup: Descending Wedge Points to Key Levels

On the daily chart, SOL traded near $120 within a descending wedge pattern defined by two converging trendlines. Monday’s reversal from $130, which produced an almost 2% decline, increased the risk of a deeper move toward the lower boundary of this formation.

The immediate downside focus sits near $115, where the support trendline links the lows from November 21 and December 18. A sustained drop below $115 could open the door to a test of the S1 Pivot Point at $107, identified as a support level positioned above the April 7 low at $95.

Mixed Momentum Signals Around Current Range

Momentum indicators on the daily timeframe sent conflicting signals as SOL fluctuated in a narrow band between $120 and $125. The Relative Strength Index (RSI) stood at 41, extending its move sideways below the 50% level and pointing to continued bearish pressure.

In contrast, the Moving Average Convergence Divergence (MACD) line was rebounding from the signal line and heading toward the zero level, hinting at strengthening bullish momentum despite the broader downtrend signal from price action.

Upside Levels to Watch

On the upside, a break above the descending wedge’s upper boundary would be needed to shift the technical tone. That overhead trendline is drawn from the highs of November 12 and December 9 and currently sits near $133. If SOL can clear that barrier, the next potential resistance level is the 50-day Exponential Moving Average (EMA) at $137, which may act as a key reference point for trend-following participants.

On the SOL/USDT daily logarithmic chart, these levels collectively mark the near-term decision zone for Solana as investors weigh ETF inflows against increasingly cautious derivatives positioning.