Cardano rallies to $0.56, but here’s why a reversal is likely

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  • Car­dano has a bull­ish mar­ket struc­ture on the 12-hour chart.
  • The lack of buy­ing pres­sure sug­gest­ed that a bear­ish rever­sal was like­ly over the com­ing days.

Car­dano [ADA] ral­lied by 19.16% from the 7th to the 11th of Feb­ru­ary. Since then, the bull­ish price action has stalled as the buy­ers ran into a thick clump of resis­tance. Despite a bull­ish Bit­coin [BTC], the buy­ing vol­ume behind ADA has not kept pace.

A recent AMBCryp­to analy­sis piece not­ed that the $0.54-$0.56 region was esti­mat­ed to have a sig­nif­i­cant amount of liq­ui­da­tion lev­els. Com­bined with fac­tors from the price action, a bear­ish rever­sal appeared possible.

The confluence of the FVG and order block

On the 12-hour chart, Car­dano has a bull­ish mar­ket struc­ture. This flip was achieved ear­li­er this month when prices ral­lied past $0.5205. How­ev­er, the 12-hour bear­ish order block (red box) at the $0.56 region came along­side the pres­ence of a fair val­ue gap (white box) at $0.55.

Cardano 12-hour price chart

Source: ADA/USDT on TradingView

The RSI was mov­ing above neu­tral 50 and agreed with the bull­ish mar­ket struc­ture. Momen­tum point­ed upward, but the OBV has been in a steady down­trend through­out 2024. This meant that even though ADA defend­ed the $0.45 sup­port zone, buy­ing pres­sure steadi­ly weakened.

A move past $0.578 would be nec­es­sary to sig­nal that the bulls could take Car­dano to $0.7. Until that sce­nario unfolds, traders could look to make prof­its going short on ADA, tar­get­ing the $0.48 sup­port zone. Car­dano investors can cal­cu­late their prof­its here.

Gauging the market sentiment in the short-term

The Open Inter­est chart trend­ed upward from the 7th to the 11th, along­side prices. This showed spec­u­la­tors were will­ing to go long. But that changed over the past 24 hours. On the oth­er hand, the spot CVD chart was unable to estab­lish an uptrend.

Like the OBV, the spot buy­ing activ­i­ty was also mut­ed on the low­er time­frames. The lack of demand meant a rejec­tion from the $0.55 region was like­ly under­way. Anoth­er for­ay into the $0.48 zone is a likelihood.

Dis­claimer: The infor­ma­tion pre­sent­ed does not con­sti­tute finan­cial, invest­ment, trad­ing, or oth­er types of advice and is sole­ly the writer’s opinion.

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