As the cryptocurrency market undergoes a correction in prices, Cardano [ADA] is showing signs of a significant potential price decline, with its daily chart forming a bearish pattern.
Joining ADA, other prominent cryptocurrencies like Bitcoin [BTC], Ethereum [ETH], and Solana [SOL] have also witnessed price corrections.
Key Levels for Cardano
According to the technical analysis by CryptoCrypto, ADA appears bearish with the formation of a bearish pin bar candlestick, indicating resistance from the descending trendline at the current moment.
When such a candlestick pattern is formed on the daily chart, it is seen as a bearish signal that traders and investors consider when taking short positions.
Since April 2024, ADA has touched this resistance level multiple times, and each time, it has encountered selling pressure. The community now anticipates a similar scenario with selling pressure leading to a price decline.
Based on recent price movements, if ADA closes below the $0.3912 mark on a daily basis, there is a high likelihood of a 20% decline, potentially reaching the $0.31 level in the coming days.
However, this bearish scenario remains valid only as long as ADA is trading below the $0.42 level. A breach of this level may negate the bearish outlook.
Bearish On-Chain Sentiment for ADA
The negative sentiment surrounding ADA is further reinforced by on-chain metrics. Coinglass, an on-chain analytics firm, reports ADA’s Long/Short Ratio at 0.93 currently, signaling a bearish sentiment among traders.
Moreover, the Futures Open Interest for ADA has not shown any significant changes in the last 24 hours, indicating a neutral stance among traders.
As of now, 51.63% of leading traders hold short positions, while 48.37% are in long positions.
Considering all these data points together, it is evident that bears are dominating the asset at present, potentially leading to a notable price drop in the near future.
At the time of publication, ADA was trading around $0.385, showcasing a 1.4% decline in the past day. The trading volume has also decreased by 35%, suggesting reduced trader participation amid the prevailing bearish sentiment.