Disclaimer: The findings of the following article are the sole opinion of the writer and should not be taken as investment advice
Cardano registered a drop of 12+%, as of 7 November. Since then, the cryptocurrency’s price has recuperated by more than 50% of this drop. In fact, at the time of writing, ADA was trading at $0.1058, with ADA the tenth-largest cryptocurrency on the charts in terms of market cap.
Interestingly, the previous week was kind to Cardano as the coin surged by 13%. At press time, however, things did not look quite good for Cardano as there was a chance a drop may be incoming.
Cardano 6-hour chart
Source: ADAUSD on TradingView
As can be observed from the attached chart, there are the following aspects to it – pattern, levels, and bias.
Last week’s price analysis indicated that the price would break out from the rising wedge and drop. The price dropped by 17% the following week. However, as of this writing, the momentary surge had come to an end and we can now expect a pullback from ADA.
The Fibonacci levels showed that the price was above the 0.236-level [$0.10531], at press time. Rejection at this level seemed very much likely, hence we can expect the pullback to go beyond the 0.236-level and hit the 0.382-level aka $0.09961.
Considering the levels, the bias was easy to figure out – it is bearish.
Rationale
The rationale is simple – A rejection at 0.236-Fibonacci level seems likely as this level was a considerably strong support in October. The RSI indicator was also observed to have dipped down from a fresh rejection at the overbought level.
The OBV indicator also pointed to declining volume for Cardano. Hence, we can expect a slowdown of the price surge and perhaps, an increase in the sideways movement or a slow drop.
Conclusion
All-in-all, ADA looked primed for a surge, however, this won’t be without a pullback. The reason for this pullback are multiple and are explained in-depth in the rationale section. To add more to this, the press time price surge did not have volume backing it. Hence, sooner or later, we can expect ADA’s price to drop.
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