Is Solana (SOL) Entering a Prolonged Bearish Correction? A Technical and Market Structure Analysis

The Solana (SOL) ecosystem has long been a focal point for crypto investors, balancing high-growth potential with volatile price swings. As of late December 2025, the asset finds itself at a critical juncture, with conflicting signals emerging from short-term bearish momentum and long-term pattern formations. This article dissects the technical and market structure dynamics to assess whether Solana is entering a prolonged bearish correction-or if the current pullback is a temporary consolidation ahead of a resumption of bullish momentum.

Short-Term Bearish Momentum: A Knife-Edge Scenario

Solana's price action in late 2025 reveals a precarious balance between buyers and sellers. The asset is currently trading within a defined range of $120–$130, with sellers struggling to push the price below the critical $120–$122 support zone and buyers failing to reclaim the $129–$132 resistance area according to technical analysis. This tight consolidation suggests a lack of conviction in either direction, but the risk of a breakdown looms large.

Technical indicators reinforce the bearish bias. The Relative Strength Index (RSI) hovers near 27.57, signaling oversold conditions, while the MACD histogram remains in negative territory, indicating waning bullish momentum as market analysis shows. The 200-day Exponential Moving Average (EMA) sits at $169.48, and as long as the price remains below this level, the bearish trend remains intact according to technical indicators. A breakdown below the $120 support could trigger a cascade of stop-loss orders, potentially driving the price toward $112–$108 and, in severe scenarios, down to $70–$90-a 45% drop from current levels as risk analysis indicates.

However, bulls have a lifeline: a clean reclaim of $132 and sustained trading above the 20-day EMA near $133 could neutralize the downtrend according to technical analysis. For now, the market appears trapped in a "holding pattern," with downside risks outweighing potential rebounds as market data shows.

Long-Term Pattern Formations: Bearish Structural Biases

Beyond short-term volatility, Solana's long-term chart patterns paint a more ominous picture. Over the past year, the asset has exhibited classic bearish formations, including head and shoulders and descending triangles, which are often precursors to sustained declines.

The head and shoulders pattern, characterized by three peaks with the central peak (the head) being the highest, was evident in early 2025 on the one-hour candlestick chart. A breakdown below the neckline confirmed the bearish reversal, projecting further downward movement according to technical analysis. Similarly, a descending triangle-a continuation pattern-emerged in late 2025, with a flat support line and a descending resistance line signaling a potential breakdown as pattern analysis shows.

Most notably, a multi-year rising wedge on the weekly chart broke down to the downside in late 2025, confirming a shift in momentum. Analysts project further declines toward key Fibonacci levels, with the breakdown reinforcing the expectation of a continued downtrend according to technical indicators. These patterns, combined with weak volume and on-chain metrics, suggest a structural bearish bias.

Synthesis: A Battle Between Bulls and Bears

The conflicting signals from short-term and long-term analyses highlight Solana's precarious position. On one hand, bullish technical indicators-such as a V-shaped reversal on weekly charts and a 20-day SMA at $131.87-suggest a potential rebound toward $260 according to market analysis. On-chain metrics like rising Total Value Locked (TVL) and stablecoin liquidity also hint at renewed demand from institutional and retail investors as data shows.

On the other hand, bearish patterns and indicators-such as the head and shoulders formation and a breakdown of the rising wedge-indicate a higher probability of a prolonged correction. The key to resolving this tension lies in Solana's ability to break out of its $120–$130 range with conviction. A sustained move above $132 could reignite bullish momentum, while a breakdown below $120 would likely accelerate the downtrend.

Conclusion: A High-Volatility Crossroads

Solana's price action in late 2025 reflects a market at a crossroads. While short-term bearish momentum and long-term bearish patterns suggest a prolonged correction is possible, the asset's technical resilience and on-chain fundamentals cannot be ignored. Investors must closely monitor key levels:

• Support: $120 (immediate), $112 (next), $70–$90 (severe).
• Resistance: $132 (immediate), $169.48 (EMA-200).

Until Solana breaks out of its current range with clear conviction, the market will remain in a high-volatility holding pattern. For now, the bearish case appears stronger, but the potential for a bullish rebound cannot be ruled out entirely.