- 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
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
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.