Solana [SOL] recorded a strong rally earlier in the week. The move from $75.6 to $92.1 was a 21.78% bounce made in just 32 hours of trading. Unfortunately for the bulls, Solana has been trading within a range for most of February.
The rally stalled out just past the range highs, and at the time of writing, was back near the range lows once again.
The market sentiment after Bitcoin’s [BTC] sell-off was extremely fearful. Panic selling was rampant due to fears of war escalation too. Solana buyers likely won’t be benefiting from this development.
The falling Open Interest and negative funding rates showed bearish SOL derivatives traders. The falling spot CVD confirmed the short-term selling pressure.
Selling has been prevalent throughout February
Solana‘s Coin Days Destroyed metric trended higher towards the beginning of February. Compared to the spike in CDD that accompanied the price drop from $128 to $67.5, the recent hike in CDD appeared more measured.
The metric served to warn that sellers were eager to use any price bounce to exit the market.
Swing traders should not be fooled by the range formation mentioned earlier. Yes, the price was approaching the local floor. The CMF was at +0.06 to signal capital inflows, and the MFI dived into oversold territory.
At the same time, the market might be in a more precarious spot overall.
Traders’ call to action – Expect a breakout below the short-term range
The weekly swing structure was bearish, and the March 2025 low at $95 has been decisively breached. The next long-term price target, according to the extension level, would be $47.93.
Therefore, traders should remain bearishly biased. A risky move would be to wait for the range lows to be retested as resistance before going short.
Bitcoin’s defense of the $64k-level and recovery above $66k would be an early sign that momentum was favoring the bulls. SOL traders should keep an eye on the $76 range lows, as well as on BTC’s short-term momentum.
Final Summary
- 7-day moving average of the Coin Days Destroyed metric climbed higher over the past week, signaling a hike in selling on-chain.
- Short-term range formation is likely to be breached by selling pressure next week.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
