Cardano’s cryptocurrency (ADA) has been maintaining a downward trajectory, recently dropping below both the 20-day and 50-day exponential moving averages (EMAs), reaffirming a bearish trend.
Following its recent decrease, ADA has been struggling to sustain its position above critical support levels, with its current value sitting around $0.3439, reflecting a 2.5% decrease within the past 24 hours.
Could Cardano experience a resurgence?
After a bounce from the $0.30 support area, ADA formed a broadening wedge pattern on the daily chart.
Despite attempting to rise above the 20-day and 50-day EMAs, ADA faced rejection at the $0.40 resistance barrier.
This rejection triggered a drop of almost 14% over the last fortnight, leading to the price falling below the EMAs.
Currently, ADA’s descending trend has identified the $0.34 level as a crucial threshold.
A breach below this level could confirm a breakdown from the broadening wedge pattern, possibly paving the way for further declines.
Bears targeting Cardano might aim for the $0.31 mark as an immediate objective, where buyers could potentially step in to defend the psychological support range.
Besides, the signal of the 20-day EMA dropping below the 50-day EMA signals growing bearish momentum in the market.
With this crossover potentially amplifying bearish pressure, ADA might revisit the $0.31 support level before a potential bullish recovery.
The Relative Strength Index (RSI) displayed relatively consistent lows alongside declining price action.
This divergence suggests a weakening of selling pressure, indicating a possible reversal in the upcoming sessions.
If ADA manages to rebound from the $0.3 level and the RSI surpasses the 50 threshold, it could indicate a buying opportunity for traders seeking to profit from short-term rebounds.
Insights from Derivatives Data
Derivatives data offers a varied perspective on ADA. The 24-hour long/short ratio stood at 0.941, reflecting a somewhat balanced sentiment.
However, the Long/Short Ratios on Binance and OKX notably skewed towards long positions at 3.5893 and 3.05, respectively.
Despite some optimism, the trading volume recorded a 34.43% decline, pointing to reduced market engagement and a potential lack of confidence among Cardano participants.
Liquidation data highlighted a prevalence of long liquidations over short ones, suggesting profit-taking could be a driving force behind the ongoing downturn rather than aggressive short-selling.
Disclaimer: The information provided does not constitute financial, investment, trading, or any other form of advice and represents solely the writer’s perspective.