Cardano [ADA] has shown a lackluster performance against Bitcoin [BTC] as it has only marginally increased by 0.4% over the past week, currently trading at $0.347. Over the last 24 hours, ADA has been consolidating within a narrow range of $0.339 to $0.35.
Emergence of Bearish Pattern in ADA
The prevailing bearish trends surrounding ADA suggest a possible continuation, with the formation of a double-top pattern evident on the daily chart. If the prevailing sentiment remains negative, ADA’s price could potentially trend downwards.
The recent test of the neckline of the double-top pattern at $0.339, which also coincides with the 100% Fibonacci level, was followed by a slight bounce. A breach of this support level could lead to a further drop in price to around $0.319.
In order to negate this bearish pattern and confirm an upward trend, ADA must surpass the $0.37 mark. However, the required buying pressure to support such a movement seems to be lacking at the moment.
The Relative Strength Index (RSI) currently stands at 46, indicating a dominance of selling pressure. Furthermore, the downward trajectory of the RSI line signifies a strengthening bearish momentum. The negative Chaikin Money Flow (CMF) supports this bearish outlook with a continued selling pressure.
Data from Coinglass reveals heightened selling activity among ADA traders, with spot inflows reaching $4.28M, the highest level observed since mid-August. This suggests a trend of traders transferring their assets to exchanges with the intention to sell.
Analysis of Derivatives Market Data
While there is a positive sentiment in the derivatives market, indicating ongoing interest, bearish signals remain prevalent. ADA’s open interest has surged to $238M, the highest for the month, reflecting a significant interest in the altcoin.
The long/short ratio for ADA currently stands at 1.07, indicating a slightly higher number of long traders compared to short traders. On Binance, over 90% of open positions on Cardano are in the long position, signaling optimism in the market.
Despite the prevailing long bias, traders betting on ADA’s upward movement are experiencing losses. In the last 24 hours, long positions worth $441,000 in ADA were liquidated, while short positions liquidated amounted to only $16,750.
However, the recent increase in whale activity suggests a potential shift in ADA’s price trajectory, as significant ADA transactions by whales have recently spiked, hinting at possible accumulation.