Presently, Cardano (ADA) is trading at $0.344, reflecting a 1.5% decline over the past 24 hours. Over the last two weeks, ADA has experienced a noteworthy 16% drop, signaling a consistent bearish trend in its price performance.
An analysis of the one-day chart suggests the possibility of this bearish trajectory continuing as Cardano exhibits a head-and-shoulders pattern, indicating a potential downtrend. This pattern illustrates a weakening in the previous rally that had propelled ADA by over 26% in late September. If market bears take control, a downward push in prices is anticipated.
Confirmation of this bearish scenario will occur if ADA breaches the pattern’s neckline at $0.344, a level that witnessed a failed attempt at a bearish breakout on October 9 before a brief resurgence by bulls.
In the event that Cardano fails to sustain levels above this neckline, a projected 8% decline could see prices testing the support at $0.311. To annul this pattern and resume an upward trajectory, ADA must surpass the resistance barrier at $0.368.
Technical Analysis Highlights
Technical assessments at the time of writing indicate a prevailing bearish sentiment. The Relative Strength Index (RSI) currently stands at 44, signaling seller dominance.
Bolstering this bearish outlook is the Moving Average Convergence Divergence (MACD) displaying a negative reading while trending below the Signal line, further confirming the prevailing bearish sentiment.
Notably, ADA may maintain sideways movement due to a concentration of liquidations above its current price, serving as a formidable resistance level. A high concentration of liquidations above the price indicates a market environment heavily influenced by short positions.
If Cardano manages to breach this liquidation zone, short traders could be compelled to cover their positions, inducing buying pressure and potentially prompting a bullish reversal.
Current Status of Cardano Wallets
Recent data sourced from IntoTheBlock unveils a reduction in the percentage of wallets “In The Money” from 34% during the peak of Cardano’s rally in late September to 16% presently. In contrast, wallets in losses have surged from 63% to 78%.
This decline in wallet profitability poses a risk of further price depreciation for Cardano, particularly if holders opt to sell to curtail their losses.
Despite these challenges, a positive sentiment envelops ADA, potentially impeding a significant price slump. Notably, the long/short ratio has surged to its highest point since early September, indicating a collective anticipation of future price appreciation among traders.