Cardano (ADA) has shown signs of weakness, with its price retreating under critical resistance levels and trading volume steadily decreasing. As it trades around $0.33, several key metrics suggest that ADA might experience further declines unless it breaks through certain resistance points. Here’s a breakdown of the technical signals and on-chain data pointing toward a bearish outlook for Cardano.
Technical Rejection from Ascending Trendline
ADA’s recent price action reflects a bearish pattern, with the cryptocurrency being rejected from its ascending trendline resistance. This trendline, drawn from multiple lows since August, was broken last week, signaling a potential shift in momentum. Cardano attempted to retest this trendline over the weekend but was met with resistance, causing the price to fall back to its current level of $0.33.
The resistance level around $0.342 appears to be a strong barrier, and if ADA cannot break through, it may continue to decline. A drop from this point could push ADA towards its September low of $0.303, marking a potential 9% decrease.
Relative Strength Index Signals Growing Bearish Momentum
The Relative Strength Index (RSI) on the daily chart currently stands at 42, which is below the neutral mark of 50. An RSI below 50 indicates that selling pressure is outpacing buying interest, reinforcing the bearish outlook. As the RSI continues to trend downward, it signals that bears are gaining control, putting ADA at risk for further losses unless demand picks up.
Key Resistance Zone: In/Out of the Money Around Price (IOMAP) Analysis
On-chain data from IntoTheBlock’s In/Out of the Money Around Price (IOMAP) adds further weight to the bearish case. According to IOMAP data, approximately 119,360 addresses acquired a total of 2.27 billion ADA at an average price range of $0.332 to $0.341. This means that many of these holders may be inclined to sell if ADA reaches this range again, as they would be able to exit at or near their breakeven point. This level thus becomes a crucial resistance zone, where selling pressure could intensify if ADA approaches it.
Interestingly, this resistance level aligns with the technical rejection zone at $0.341, adding another layer of significance to this price point. If Cardano fails to breach this combined technical and on-chain resistance level, it could face further downward pressure.
Falling Trading Volume Indicates Reduced Market Interest
Another indicator of a potential decline is ADA’s shrinking trading volume. Data from Artemis Terminal highlights a significant drop in daily trading volume, which fell from $545 million on Friday to $197 million by Sunday—the lowest level since early October. This reduction in trading volume reflects declining trader interest and reduced liquidity in the Cardano market.
Decreased volume often points to limited buying interest, which can lead to increased price volatility and a higher likelihood of declines. The steady drop in trading activity since mid-February signals that the demand for ADA may be waning, compounding its vulnerability to further price drops.
Bearish Thesis Invalidated Above $0.367
While the outlook appears bearish, a reversal scenario remains possible. For ADA’s bearish trend to be invalidated, it would need to close above the $0.367 level. If ADA breaks through this resistance, it could signal renewed buying interest, pushing the price toward its September high of $0.415.
A daily close above $0.367 would mark a notable shift in sentiment, potentially igniting renewed confidence among traders and buyers. However, until ADA surpasses this level, the bearish trend remains dominant, with declines being the more likely outcome.
Conclusion: Key Levels to Watch for Cardano’s Next Move
As Cardano navigates these critical levels, traders should keep an eye on the $0.342 resistance, as well as the support level at $0.303. The $0.342 level, in particular, holds significance due to the convergence of technical and on-chain resistance indicators.
If ADA fails to break above $0.342, further declines may be expected, particularly given the declining trading volume and bearish RSI reading. However, a close above $0.367 could reverse the trend, offering potential for an upward move toward $0.415.
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