- Cardano price has created a bearish divergence, hinting at a potential retracement.
- Investors can expect ADA to see a 15% downswing under certain conditions.
- A daily candlestick close above $0.550 will invalidate this bearish outlook.
Cardano price is ready to take a U-turn after July 27’s rally as indicators display a clear trend reversal. Investors need to wait for a confirmation before triggering their short positions for ADA.
Cardano price bearish reversal is on the cards
Cardano price rallied 15% over the last 24 hours and set a lower high at $0.519. This move was prompted by the Federal Reserve’s interest rate hike of 75 bps. The announcement was followed by a spike in buying pressure for Bitcoin price and massive rallies for altcoins, including ADA.
However, for Cardano price, this bullish move comes as a forewarning of a bearish signal. The swing highs formed on July 23 and July 28 are lower highs, while the Relative Strength Index (RSI) has formed a higher high.
This divergence is a bearish one and forecasts a reversal in ADA’s recent rally.
ADA/USDT 4-hour chart
ADA and market makers’ hidden agenda
While the technicals are clearly indicating a reversal of the recent rally for Cardano price, the fractal formation adds credence to this theory.
ADA formed a swing low at $0.435 on June 13 and the low was swept on June 18, triggering a 25% rally. During this liquidity run, the RSI dug below the oversold zone.
Similar events occurred for the June 30 swing low at $0.435, which was swept of any liquidity on July 13. This liquidity run on July 13 also caused the RSI to dip into the oversold zone.
Now, that ADA looks ready to retrace, investors can expect Cardano price not just to retest the $0.472 support level but shatter it and revisit the $0.435 level again. This move would sweep the July 26 swing low at $0.450 and potentially push the RSI into oversold territory.
So investors can play this move in two ways
- Short the move to $0.435
- Wait for the fractal to form and long ADA after a sweep of the $0.450 level or at the retest of $0.435.
ADA/USDT 4-hour chart
On the other hand, if this bullish momentum continues to propel Cardano price higher, there is a chance that the short opportunity described above might not arrive. If ADA produces a daily candlestick close above $0.550, it will invalidate the bearish outlook.
In such a case, Cardano price might revisit the $0.628 hurdle.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin: Retraces to around $75,000 after hitting new all-time high
Bitcoin (BTC) edges slightly down on Thursday and trades at around $74,900 after hitting a new all-time high (ATH) of $76,400 on Wednesday, buoyed by the victory of the crypto-friendly candidate Donald Trump in the US presidential election.
Ethereum price jump spurs most significant ETF inflows in six weeks
After a positive momentum in crypto markets following the outcome of the US presidential election, spot Ether exchange-traded funds (ETFs) in the United States saw their highest inflows in six weeks.
Top trending meme coins PEPE, BONK, and FLOKI achieve double-digit gains following Trump’s victory
The prices of top trending meme coins Pepe (PEPE), Bonk (BONK) and FLOKI (FLOKI) experienced double-digit gains following Trump’s victory on Wednesday. The technical outlook suggests that the three meme coins hover around key levels, and the breakout could push these coins higher.
SUI hits new all-time high fueled by Trump election win
Sui (SUI) edges down on Thursday and trades at around $2.24 after hitting a new all-time high (ATH) of $2.38 earlier in the day, buoyed by the victory of a crypto-friendly candidate, Donald Trump, in the US presidential election.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.