Cardano (ADA) finds itself in turbulent waters, having fallen nearly 15% over the past week. As of January 25, the token is trading at approximately $0.34, echoing the broader market sentiment as investors closely monitor critical price levels.
The current trading range sees ADA testing a key support zone around $0.33, historically recognized as a crucial area where buyers have stepped in during market downturns. This level will be pivotal in determining whether the recent selling pressure eases or intensifies.
Analysis from market expert Butterfly points out signs of accumulation from buyers near the lower edge of the price channel. Yet, caution prevails as weekly indicators such as the MACD and Money Flow Index suggest continued bearish momentum could dictate the short-term outlook.
ADA seems entrenched in a bearish pattern, characterized by lower highs and lower lows on the two-day chart. Past attempts to rally above this channel have faltered, leading to subsequent retreats, indicating persistent selling pressure. The descending channel remains a critical focus for traders navigating these volatile conditions.
If the recent support near $0.33 holds, there may be potential for ADA to bounce back, aiming for the middle range of the channel. However, traders should remain vigilant, as previous rebounds have met resistance between $0.60 and $0.70, where sellers typically re-enter the market.
Failure to maintain the current support could spell more trouble for ADA. A break below the $0.32 to $0.33 range may instigate further declines, particularly given the bearish channel structure.
Weekly Indicators Indicate Bearish Pressures
On the weekly chart, ADA paints a deteriorating picture for holders. The token remains below significant exponential moving averages, indicating that sellers continue to dominate the market. The 20-week EMA hovers around $0.50, while the longer-term EMAs (50, 100, and 200-week) range between $0.57 and $0.61.
Current Money Flow Index readings at 16.8 highlight weak money inflows into ADA, suggesting little buying power is present at this moment. Moreover, the MACD is firmly in negative territory, reflecting persistent bearish momentum.
In terms of market activity, futures Open Interest for ADA has plummeted to $108.55 million on Binance, reaching its lowest since December 25, signaling a notable decrease in participant engagement. This drop in Open Interest often correlates with a lack of interest in opening new positions, further underscoring market hesitance.
Should declines continue, ADA may test its December 31 low of $0.32. A sustained close below this pivotal level could escalate the downtrend, potentially leading towards the October 10 low of $0.27.
As Cardano navigates these challenging conditions, traders will be eagerly watching how the support levels hold up amid ongoing bearish pressures.
