- Cardano formed a bearish head-and-shoulders pattern on the one-day chart
- Lack of buyer support amid rising selling activity could result in an 8% drop in the short term
As a seasoned researcher with years of experience tracking the cryptocurrency market, I must say that the current outlook for Cardano (ADA) is somewhat concerning. The head-and-shoulders pattern on the one-day chart suggests a potential downtrend, and if ADA breaks below the neckline at $0.344, we could see an 8% drop to the support at $0.311 in the short term.
At this moment, Cardano (ADA) was being traded at $0.344 following a 1.5% decrease over the past 24 hours. Notably, ADA’s price trend has been downward over the past fortnight, with a fall of approximately 16%.
Glancing at the daily chart, it appears the bearish trend might continue due to a head-and-shoulders pattern observed in Cardano. This pattern hints that the token may be entering a downward phase. The rally that pushed ADA up by over 26% in late September seems to be losing strength, which could trigger market bears to sell, potentially causing prices to drop further on the charts.
If the ADA cryptocurrency falls below its pattern’s neckline, which is around $0.344, it will solidify a downtrend. On October 9th, there was an attempt at this bearish breakout, but the bulls managed to re-enter the market before it was fully realized.
If Cardano can’t maintain its position above the current neckline, there’s a good chance it will decrease by around 8%, reaching the support of $0.311. However, if it wants to disprove this pattern and continue its upward trend, it needs to overcome the resistance at $0.368.
Technical indicators show THIS
Currently, as I’m typing this, it appears that the market has been experiencing a bearish trend. The Relative Strength Index (RSI), at 44, suggests that the selling pressure is stronger than the buying pressure right now.
This momentum seemed to be strong as the RSI line dropped below the Signal line.
In simpler terms, the Moving Average Convergence Divergence (MACD), which is a common tool used in technical analysis, was showing a decrease and stayed under the Signal line. This additional evidence reinforced the theory that ADA might continue to drop in value, suggesting a bearish outlook for the crypto asset.
At the current moment, ADA could potentially maintain a horizontal trading pattern because there’s a concentration of sell orders (liquidations) set slightly above its current price. This densely packed area of sell orders typically serves as a robust barrier, making it difficult for the price to rise significantly and acting more like a strong resistance level.
If the number of potential sell-offs exceeds the buy-ins, especially at prices higher than the current one, it suggests that short positions have a significant influence in the market.
If Cardano surpasses this area, it might compel short traders to exit their trades, leading to increased demand and possibly a bullish turnaround.
Cardano wallets in profit
Ultimately, recent data from IntoTheBlock shows a significant decrease in profitable holders since Cardano’s price surge ended in late September. Specifically, the number of wallets that were “In The Money” (meaning they had made a profit) has dropped from 34% to 16% as of now.
At the same time, the wallets in losses surged from 63% to 78%.
A decrease in Cardano’s wallet profitability might lead to more instances of price decline, especially if investors decide to sell off to limit their losses.
Despite a potentially negative outlook, optimism about ADA persists, which might ward off a steep price decline. In other words, the long/short ratio has surged to its peak since September’s beginning, suggesting that traders are wagering on future value increases.
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2024-10-12 04:10