Cardano (ADA) It has managed to follow Bitcoin’s recovery since its price recorded this year’s low on May 12, rallying at an impressive 24% overall. However, the risks of the technical model, which shows a downward trend on the 4-hour chart, continue. Continuing to rise in volume on exchanges could result in bears dominating the market again and the price could drop by 31%.
On this subject, a different collapse model was discussed a lot in the technical analysis of a different analyst.
Cardano managed to establish a support base at $0.38 last week after its worst correction so far this year. Since then, trade entries have continued to gain on Tuesday morning, ADA price It had managed to reach a value of $0.58, up 51%.
However, there seem to be a few technical hurdles standing in the way of the price moving higher. Although Cardano price showed new highs, the price remained mixed within a rising wedge pattern, which is also referred to as a model that is extremely susceptible to disruption.
Also, the daily chart showed that Cardano has a long way to go before reversing the downtrend. Candles are still trading below all major moving averages (20, 50 and 200-SMA) and the most widely used indicator, the Relative Strength Index, is not yet in a comfortable zone to attract more bullish traders to the market. Sellers continue to dominate the exchanges.
Apart from exchanges, data also showed that ADA’s price growth is about to slow down. Exhange volumes have been falling since May 12, indicating that traders are slowly moving away from ADA.
Also, the remaining trade orders showed that the sellers were very clearly outweighed. The order book, which took into account the trades made in the last 12 hours, showed that sell orders easily outstripped buy orders on exchanges.
Cardano 4-Hour Chart
Given that Cardano is trading within a bearish technical pattern and buying pressure has eased, the market looked vulnerable to a breakout. Based on the height of the pattern, the ADA price seemed highly sensitive to a 33% drop below $0.54. The mentioned correction will pull the price back to the $0.38 support and set off another recovery by the bulls.
Cardano could reverse its weak outlook on the possibility that Bitcoin rallies above $30,000 and triggers an altcoin rally. However, if currency volumes continue to decline, it will be difficult to make any gains above the daily 20-SMA near $0.68 (not shown).
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.