Cardano (ADA) has been struggling to keep pace with Bitcoin (BTC) recently, showing only a modest gain of 0.4% over the last seven days. As of press time, ADA is trading at $0.347. With the price oscillating between $0.339 and $0.350 in the past 24 hours, it appears that the altcoin is in a phase of consolidation, raising concerns among investors about its future trajectory.
Emergence Of A Bearish Pattern
Analyzing ADA’s daily chart reveals troubling signs for the altcoin, particularly the formation of a double-top pattern. This classic bearish setup often signals a potential trend reversal, and given the current market sentiment, ADA may be heading for a downtrend.
ADA’s bears recently tested the neckline of this pattern at $0.339, coinciding with the 100% Fibonacci level. Although the price bounced back, a breach of this crucial support could lead to a steeper decline, potentially targeting $0.319.
To dispel this bearish outlook and confirm an uptrend, ADA needs to break through the $0.37 resistance level. However, the lack of buying support raises doubts about this possibility.
Technical Indicators Paint a Bearish Picture
The Relative Strength Index (RSI) currently stands at 46, indicating that sellers have taken control. The downward trend of the RSI line suggests that bearish momentum is increasing. Adding to the grim outlook, the Chaikin Money Flow (CMF) is also negative, reflecting ongoing selling pressure in the market.
Data from Coinglass further supports these bearish signals, revealing that ADA traders are actively selling. Recent spot inflows surged to $4.28 million, marking the highest level since mid-August. This indicates that many traders are transferring their coins to exchanges, likely in anticipation of selling.
Insights from the Derivatives Market
Despite the prevailing bearish sentiment, some encouraging indicators emerge from the derivatives market. ADA’s open interest has climbed to $238 million, the highest level this month, suggesting increased interest in the altcoin. The long/short ratio stands at 1.07, indicating a slight preference for long positions among traders. Notably, over 90% of open positions on Binance for Cardano are long, reflecting some optimism in the market.
However, the optimism seems misplaced as traders betting on ADA’s gains are facing significant challenges. In the last 24 hours alone, $441,000 worth of ADA longs were liquidated, compared to only $16,750 in shorts.
Also Read: Cardano (ADA) Whale Inflows Hit 4.79B – Is A 20% Breakout Imminent?
On a more positive note, recent spikes in whale activity could indicate a possible turnaround for ADA. Large transactions suggest that some whales are accumulating, which might support a price recovery if sustained.
As the market navigates these conflicting signals, investors remain cautious. The coming days will be critical for Cardano (ADA) as it seeks to redefine its path amidst bearish trends and evolving market dynamics. With the eyes of the crypto community closely monitoring these developments, the question remains: can ADA overcome the current challenges and reclaim its bullish momentum?
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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