Cardano (ADA) faced a rough patch recently, with a decrease of over 23% and consistently staying below $1 for more than a week. Despite this downturn, technical indicators hint that the downward trend might be losing steam.
Indicators like ADX show that the selling pressure is easing, and the number of whale addresses is decreasing, indicating that major investors are divesting. These signs point to a potential test of resistance levels around $0.64 in the near future.
The fade of Cardano's Current Downtrend
ADA’s Average Directional Index (ADX) has fallen to 23.4 from 34 a day ago and 37 two days earlier. ADX is a crucial tool to gauge the strength of a trend on a scale from 0 to 100.
Typically, values above 25 suggest a robust trend, while below 20 implies a weak or consolidating market. A decreasing ADX signifies a weakening trend, even if the price movement remains constant.
With ADA’s ADX dropping significantly, it indicates that the ongoing downtrend could be losing momentum.
The decrease in ADX for Cardano suggests that the bearish trend is slowing down, although it hasn't vanished entirely.
If ADX continues to decrease below 20, it could signify a waning selling pressure, potentially leading to consolidation or a reversal. A surge in buying volume alongside a rise in ADX would confirm a renewed bullish trend.
The steady drop in ADA whale addresses over the past few days
The number of accounts holding between 1 million and 10 million ADA has declined to 2,455 from 2,484 on March 8.
This steady reduction implies that large holders have been selling their ADA positions recently. Monitoring whale activity is crucial as these investors tend to influence market movements.
A decline in whale addresses could lead to increased market volatility as smaller investors absorb the selling pressure. This trend of diminishing whale holdings might suggest a lack of strong buying support for ADA at current levels.
The anticipation for Cardano to surge back to $1
ADA's Exponential Moving Average (EMA) lines suggest that Cardano is currently consolidating with short-term EMAs below the long-term ones.
This scenario indicates that the bearish momentum is not prevailing, and a potential trend reversal could occur with increased buying pressure. If ADA can break the resistance at $0.75 and start an uptrend, it may rise towards $0.81 or even higher.
A robust bullish breakout could propel Cardano's price even higher, with potential targets at $1.02 and $1.17 if positive momentum persists.
On the flip side, intensified selling pressure could push ADA to test critical support at $0.64. Failing to hold this level could weaken its position, possibly leading to further declines towards $0.58.
The closely aligned EMA lines indicate that Cardano is at a crucial juncture, where either a breakout or breakdown is imminent.