The cryptocurrency market has recently witnessed a significant recovery in the price of Cardano (ADA), with a 20% increase over the span of a week, soaring from a critical support level. This resurgence saw the digital currency’s value climb to $0.683, energized from a dip to the 100-day EMA threshold at $0.57.
Cardano’s Sell-Off Signals at Elevated Prices
In spite of ADA’s recovery, the current market dynamics suggest that the price may face selling pressure at the rejuvenated levels. The cryptocurrency had previously succumbed to a correction phase that commenced in mid-March, which shaved nearly 30% off its value. This trend was evident as ADA’s price diminished to $0.569 after failing to sustain higher prices around $0.81.
Although ADA has managed to rally to $0.636, analysts caution that the supply zone near $0.683 may be a cue for investors to sell into strength. Such behavior could set the stage for a potential retraction to the $0.57 support level, hinting at a precarious balance between recent gains and the threat of a downturn.
Technical Indicators Hint at Potential Reversal
Technical analysis of ADA’s daily chart suggests that a reversal of the upward trend could be brewing, with the possibility of a head and shoulders pattern—a bearish indicator—forming. This pattern may suggest sellers are gaining the upper hand and could foreshadow a continuation of the correction phase.
Such a bearish pattern would be confirmed if ADA’s price descends below the crucial $0.57 neckline support. A breach of this level can also undermine the token’s adherence to a five-month ascending trend line, potentially dragging the price further down to $0.46, which equates to a significant 18% loss from current levels. Nevertheless, should the price uphold above this rising support, it could nullify the bearish outlook and preserve the momentum gained from the recent price surge.