SOL Has Formed a Flag, but Confirmation Is Still Pending

SOL climbed from the mid-$70s to an August high near $110, a move of roughly 45%. It has since held above the former breakout area while recording lower highs beneath a descending trendline. Traders describe this structure as a bull flag: a sharp advance followed by a contained pullback.

For now, the chart shows compression after a rally rather than a confirmed continuation move. A break above $105 would provide the first signal. SOL would then need to close above $110 and hold that former high as support.

Three levels define the setup:

• $98-$100: The base of the flag. A daily loss of this area would weaken the continuation structure.
• $103-$105: The falling trendline and first breakout area.
• $110: August’s high and the level where buyers would need to absorb renewed selling.

Why $110 Matters More Than the Trendline

A break through $103-$105 would remove the immediate trendline barrier. However, $110 is the harder test because it is where the August rally failed and where sellers are most likely to return.

A recent Solana analysis identified $105 as a weekly resistance cluster and $134 as the next larger barrier. A full measured move would point closer to $135-$140, depending on the breakout point. That is a chart projection rather than a forecast, and nearer resistance levels would need to be cleared first.

A daily close below the $98-$100 base would invalidate the immediate bull-flag structure and return attention to the next retracement area near $91-$92, identified in SOL’s earlier August structure.

Futures Dominate Reported SOL Turnover

According to data from CoinGlass, futures turnover reached $9.46 billion over 24 hours, compared with about $997 million in spot volume. SOL futures volume was therefore roughly 9.49 times larger than spot volume.

That ratio is not a measure of new money entering SOL. Futures contracts also serve hedging and arbitrage purposes, and the same contract can trade several times. The ratio does, however, leave SOL more exposed to rapid moves caused by leveraged positioning when the price reaches support or resistance.

Aggregate open interest has fallen from the $7.14 billion recorded on August 30, while SOL has declined from about $107 to $103. Because open interest fell much more than the token price, the data suggests a reduction in outstanding exposure beyond the effect of SOL’s price decline. It cannot show whether that reduction came mainly from longs or shorts.

The next breakout attempt should be viewed through that lens. A move above $105 and $110 supported by stronger spot turnover would carry more weight than one driven mainly by a fresh build-up in futures contracts. An earlier analysis of SOL’s leverage near $110 explains why that distinction matters.

Stablecoin Supply Adds Capacity, Not a Buy Signal

DefiLlama placed stablecoin supply on Solana at $16 billion, up nearly $490 million, or 3%, over seven days. USDC represented about 43% of the total.

The increase gives the network a larger pool of dollar-denominated assets that could be used for trading, collateral or liquidity provision. It does not show that the capital is being deployed into SOL. Stablecoins can remain in wallets, lending markets or liquidity pools without becoming direct buying pressure.

A sustained breakout would require stronger spot buying, not only futures activity. A rise in SOL trading alongside the stablecoin balance would provide more convincing evidence that on-chain liquidity is participating in the move.

The Breakout Needs the Right Kind of Demand

The chart now gives buyers a clear task: turn a move above $110 into accepted support rather than another brief test of August’s high.

The next move matters less than its composition. A breakout led by spot demand and accepted above $110 would support the continuation case. By contrast, a leverage-heavy push that quickly loses $98-$100 would show that the consolidation was not a bull flag after all.

This article is for informational purposes only and does not constitute investment, financial or trading advice. Cryptocurrency markets and leveraged derivatives involve substantial risk.

Source: Coindoo