Cardano (ADA) has struggled to regain bullish momentum after facing rejection at $1.23 on Jan. 20. Despite an initial rally above $1, the cryptocurrency has since been confined within a descending channel, signaling a potential continuation of the downtrend.
ADA’s Technical Challenges
A descending channel, characterized by lower highs and lower lows, has formed on Cardano’s daily chart. While a break above the upper trendline could invalidate the bearish outlook, ADA continues to trade within this formation.
The Ichimoku Cloud indicator further reinforces this pessimistic view. Positioned above ADA’s current price, the cloud suggests strong resistance levels. If this setup persists, ADA could extend its downward movement in the coming weeks.
On-Chain Data Supports Bearish Sentiment
From an on-chain perspective, Santiment data reveals that the Mean Dollar Invested Age (MDIA) has been increasing. This metric, which tracks the average age of all tokens on a blockchain weighted by their purchase price, suggests a lack of active trading. Typically, a declining MDIA reflects increased trading activity and potential bullish momentum. However, the rising MDIA indicates that holders are refraining from trading their ADA tokens, reducing liquidity and making a price surge less likely.
Potential Price Scenarios for ADA
At present, ADA has fallen below the crucial $0.70 support level, which previously fueled a rebound to $0.82 on Feb. 18. However, the likelihood of a similar recovery remains uncertain.
The Awesome Oscillator (AO), which measures market momentum, is flashing bearish signals. A negative AO reading suggests declining momentum, increasing the probability of ADA dipping below the next support at $0.56. If bearish pressure intensifies, Cardano’s price could plummet by 50% to $0.32.
On the other hand, if ADA manages to break above $0.70, bullish momentum could take it toward $0.94. A further market-wide rally could push the price to retest $1.11.
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Cardano’s price action remains weak, with both technical indicators and on-chain metrics pointing toward further downside risk. Unless ADA breaks above key resistance levels, the bearish outlook may persist, potentially leading to deeper corrections in the near term.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
