The world of cryptocurrency is ever-changing. With consolidation taking place between Bitcoin and Ethereum, various cryptocurrencies have followed their stride. There has been high volatility over the past week in the market. Cardano (ADA) has its price in a bearish state at the time of writing. With the current price of ADA being $0.2634, the token is starting to trade up. Currently, the value is 1.78% higher than the last 24 hours despite the overall bearish sentiment.
ADA Forming A Bearish Pennant Pattern
The ADA chart exhibits candles with pronounced long-wick rejections on both ends, indicative of the prevailing uncertainty in the market. Notably, a significant pattern has emerged on the daily chart, characterized by a downward trend followed by a lateral movement. This distinct price action formation bears a resemblance to a bearish pennant pattern.
It is interesting to note that in the last week, ADA’s price movement has been bounded by two converging trendlines, mirroring the prevailing sense of uncertainty in the market sentiment. A closer analysis of the chart reveals the formation of a bearish pattern, suggesting the emergence of a pennant pattern.
If you are wondering what these pennant patterns are, then let us explain. Pennant Patterns are commonly associated with downtrends and act as brief respites that provide a temporary pause to the ongoing bearish momentum, potentially prolonging the preceding trend.
Understanding the ADA Selling Pressure
It is interesting to note here that despite all that’s happening, Cardano is trading in the green right now, and it appears that bulls are trying to resist this bearish phase.
However, despite these developments, a recent reversal from the upper trendline of the pattern, the price action appears poised to challenge the lower support level. Moreover, a scenario with higher probability involves Cardano’s price breaking below the lower trendline, potentially intensifying the existing selling pressure.
If such a breakdown occurs, it might trigger a subsequent decline. Conversely, if the ADA price manages to achieve a bullish breakout from the current chart formation or rebounds from the $0.22 support level, the upward trajectory could still encounter limitations around the $0.3 mark. This is due to the presence of a downsloping resistance trendline that buyers might contend with in that vicinity.
It is also important to note here that the ascending slope of the ADX of Cardano underscores the seller’s robust influence in extending the ongoing correction trend. On the other hand, the downward trajectory of the lower band within the Bollinger band indicator of ADA highlights the persistent vigor of the underlying selling momentum.
On the daily chart, two prominent resistance trend lines are currently evident, demonstrating robust resistance levels that come into play during bullish rebounds. In order for prospective investors to obtain a more compelling confirmation of a trend reversal, it has become imperative for Cardano’s price to breach these formidable barriers.
Bearish Signals and Potential Reversal (Update 5 August 2023)*
As of 5th August, Cardano (ADA) is priced at approximately $0.35. In the last 24 hours according to CoinMarketCap. ADA has experienced a decline, losing a certain percentage of its value. The exact gains or losses in the last 24 hours may vary depending on real-time market fluctuations. Additionally, the trading volume for ADA is currently at $188,742,565.