- Cardano has formed a double-top pattern on the daily chart suggesting a bearish reversal.
- The spike in ADA spot inflows indicates that selling pressure could intensify and push prices lower.
Cardano [ADA] has underperformed against Bitcoin [BTC] given that in the last seven days, the altcoin has gained by a slight 0.4% to trade at $0.347 at press time. ADA was also showing signs of consolidation as in the last 24 hours, the price has oscillated within a narrow range between $0.339 and $0.35.
ADA’s bearish pattern emerges
The bearish trends around ADA could persist given that the daily chart shows the formation of a double-top pattern. This pattern usually shows a trend reversal, with ADA now poised for a downtrend if the sentiment fails to become positive.
ADA bears tested the neckline of this double-top pattern at $0.339, also the 100% Fibonacci level, before the price bounced. If ADA breaches this support and drops lower, the price will likely plunge to $0.319.
(Source: Tradingview)
For ADA to invalidate this bearish pattern and confirm an uptrend, it needs to rally past $0.37. However, the buying support needed for such gains is lacking.
The Relative Strength Index (RSI) is at 46 showing that sellers are in control. Additionally, the RSI line is tipping south, showing that the bearish momentum is gaining strength. The negative Chaikin Money Flow (CMF) also paints a bearish picture as selling pressure continues.
Data from Coinglass confirms that ADA traders are actively selling. The spot inflows recently surged to $4.28M, the highest level since mid-August. This suggests that traders are moving their coins to exchanges with the intent of selling.
Source: Coinglass
Analyzing derivatives data
The derivatives market shows that while the sentiment is positive, bearish signals have persisted. ADA’s open interest had increased to $238M at press time per Coinglass. This metric is at the highest level this month indicating that interest in the altcoin is high.
ADA’s long/short ratio stood at 1.07 showing that there are slightly more long traders than short traders. On Binance, more than 90% of the open positions on Cardano are long indicating market optimism.
Source: Coinglass
Read Cardano’s [ADA] Price Prediction 2024–2025
Despite this long bias, traders betting on ADA gains continue to record losses. In the last 24 hours, $441,000 worth of ADA longs were liquidated while only $16,750 shorts were liquidated.
Nevertheless, whale activity could signal a turnaround for ADA price. Large ADA transactions recently spiked suggesting that whales could be accumulating.
