As of the latest data, Cardano (ADA) was priced at $0.344, reflecting a 1.5% decline in the past 24 hours. Notably, ADA has been experiencing a bearish phase recently, with its value decreasing by 16% over the previous 14-day period.
Upon examining the one-day chart, a distinct bearish pattern emerged, indicating a possible continuation of the downward trend for Cardano. This pattern resembles a head-and-shoulders formation, signaling a potential downtrend for the token. The previous surge that led ADA to a gain of over 26% in late September appears to have lost steam, paving the way for market bears to exert downward pressure on prices.
The confirmation of this bearish outlook would be solidified if ADA breaches the pattern’s neckline at $0.344. There was an attempt to break below this level on 9 October, which was thwarted by bullish intervention.
In the event that Cardano fails to maintain positions above the aforementioned neckline, a probable 8% decline could see the price test support at $0.311. To negate this bearish pattern and resume an upward trajectory, ADA must surpass the resistance at $0.368.
Insights from Technical Indicators
Presently, technical indicators indicate a prevailing bearish sentiment. The Relative Strength Index (RSI) stands at 44, indicating sellers’ dominance in the market. The RSI line falling below the Signal line underscores the strength of this bearish momentum.
The Moving Average Convergence Divergence (MACD) continues to display a negative reading, persisting below the Signal line, further substantiating the bearish argument against ADA’s price movement.
ADA may linger within a sideways trading range due to a concentration of liquidations above the current price level, acting as a robust resistance barrier.
When liquidations are more prominent above rather than below the price, it signifies a prevalence of short positions in the market.
Hence, breaching this liquidation zone could compel short traders to close their positions, inducing buying pressure and possibly triggering a bullish reversal for Cardano.
Assessment of Cardano Wallet Activity
Latest data from IntoTheBlock highlights a shift in wallet profitability for Cardano following the exhaustion of its rally in late September. “In The Money” wallets decreased from 34% to 16%, whereas wallets in losses surged from 63% to 78%.
This decline in wallet profitability might lead to further price downtrends for Cardano, especially if holders opt to sell to mitigate losses.
Despite these developments, the overall sentiment surrounding ADA remains optimistic, potentially mitigating significant price declines. Notably, the long/short ratio has spiked to its highest level since early September, indicating market participants’ increasing bets on future price upswings.