Cardano (ADA) is currently experiencing a clear seven-day decline, which has been exacerbated by a fresh dip below the $0.41 level. This decline is part of a broader trend observed across many altcoins, which negative reaction to ethereum big drop In the last 24 hours.
The decline represents a correction from an upward trajectory that started earlier in the month, where ADA holders saw good gains. Consequently, this up-and-down movement has created some crucial support and resistance levels for ADA, which will be crucial for investors to watch in the coming days. Market sentiment has changed significantly, and traders are now focusing on these key levels to gauge whether ADA might bounce back or continue its downward trajectory.
Important ADA Price Levels
At the time of writing, Cardano is trading at $0.3963 and has corrected 11.6% from its peak of $0.4485 in the last 48 hours. Zooming out on the monthly timeframe shows that the cryptocurrency is only correcting after a strong rally. During this rally, ADA rose from $0.3213 to $0.4545 in a week, which represents a staggering 41.5% increase. However, the $0.45 level acted as a major resistance point, causing ADA to reverse and enter a consolidation phase between $0.45 and $0.40, which was followed by a recent breakdown below support.
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according to Technical Analysis According to the crypto analyst, this consolidation movement has created a pattern similar to a small bullish flag, and a break above $0.45 could push ADA higher to $0.6. This suggests that ADA could soon bounce back to the support level and resume its upward trend.
On the other hand, ADA price action analysis suggests that a breakout to the downside could push it to the final major support level at $0.32 and erase all the gains made earlier in the month. However, this is unlikely to happen in the near term, as ADA now finds itself hovering around the $0.40 price level.
What’s next for Cardano?
according to According to blockchain analytics firm Santiment, Cardano (ADA) is one of three cryptocurrencies with significantly negative funding rates on major exchanges. However, Santiment notes that this may not be entirely harmful. Significantly negative funding rates indicate a high probability of price increases through potential short liquidations.
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Over the past five weeks, Cardano has been Constantly short On exchanges. If these short positions are liquidated even by a small price increase, it could lead to a significant price spike. This liquidation could act as a catalyst, pushing the value of ADA to an extended rally above $0.6. A potential catalyst for a price spike could be Chang Hard Fork Upgrade to the Cardano blockchain.
Featured image created using Dall.E, chart from Tradingview.com
