With a negative ROI of 22% over the past 30 days, ADA struggled to cope with selling pressures scattered across the altcoin market. Not only did the bullish pattern fail, but the support levels did not provide any momentum move either.
However, here is what traders can expect.
The motivation is running out
In the period between July and August, market participants are busy accumulating ADA. In fact, the average bankroll has skyrocketed during this time. But in the midst of the hype surrounding the Alonzo Hard Fork in September, the trend changed.
The index is starting to fall, which shows that interest is waning.
Average balance (green) | The source: IntoTheBlock
In addition, the interest of the organizations collapsed. For example, in the week following the May 19 incident, ADA saw an inflow of $ 11 million from institutional assets. On the flip side, last week’s cumulative inflow was only $ 2.6 million.
In addition, the large-cap digital fund Grayscale, which ADA is a part of, did not do well. September 2nd is not a happy day for Bitcoin and ETH. However, that day, ADA noted an ATH of $ 3.1. At the same time, Grayscale’s share price was close to a multi-month high on the same day.
So, while ADA only accounts for 5.2% of the fund (compared to 65.7% for Bitcoin and 26.6% for ETH), it clearly has a distinct impact on the overall price of the stock. After that, however, the price of ADA gradually fell, like the “worm that made the soup pot” before. In fact, the demand has not increased either.
It’s worth noting that Grayscale hasn’t added an ADA to its assets under management (AUM) recently. In fact, the accumulated AUM fund has decreased from $ 472.9 million to $ 453.4 million in the past 24 hours.
The source: Grayscale
Additionally, according to data from Messari, token circulation declined significantly in September, largely indicating a lack of movement given the bearish state of ADA.
ADA circulation supply (green) | The source: Messari
Looking back, it can also be said that the benefits of Cardano have steadily declined over the past month.
Is there a risk of price loss?
If market participants remain apathetic, the likelihood of a drop to $ 1.87 and even $ 1.65 is higher. If ADA hits that floor, addresses that have accumulated at the time of writing will lose less than buying FOMO for $ 3.
However, if buyer momentum resurfaces and ADA manages to break above $ 2.29 to $ 2.50, traders can expect the price to soar as high as $ 2.60. ADA will be a lot better if it jumps above $ 2.30. Failure to hold this level could result in a massive sell-off if the price falls.
Now ADA is forming a falling wedge and buyers will have more opportunities. At this point the falling wedge stops at 50% Fibonacci.
If the ADA cannot build up constant buying pressure, sellers will exploit certain weaknesses in their structure. At the time of writing, ADA is trading at $ 2.11, up 2.4% over the past 24 hours.
ADA / USD | Source: TradingView
The ADA swing low at $ 0.95 and the record high at $ 3.09 are the basis for identifying several key Fibonacci retracements on the daily chart. In the second week of September, buyers have a good chance of breaking out of the bull flag between the popular fib retracement areas of 23.6% and 38.2%.
These short-term retreat areas are ideal for flag building. However, the pattern failed to generate significant buying pressure and sellers negated the setup. As a result, ADA slid into a moderate retracement zone between the 38.2% and 50% lines.
From this point on, buyers have a few more options to carry out the uptrend. An instant rebound and a close above the 38.2% Fibonacci will allow buyers to break out above $ 2.6 and $ 2.8. This is a 31% increase from the price at the time of this writing by ADA. Additionally, a triple bottoming at $ 1.90 also has the potential to trigger a significant rally.
On the flip side, closing below the 61.8% Fibonacci would be disastrous for ADA. From there, the 200 SMA (green) is the best hope for a rebound.
Currently, based on the squeeze momentum indicator, the selling pressure has eased over the past few days. If selling pressure eases while ADA holds above $ 1.90, a breakout is likely.
The lower peaks in the MACD histogram provide the same argument. In the meantime, the RSI needs to move above 55 for more upside potential. At the time of writing, some downward pressure is keeping the RSI below 50.
In summary, ADA had multiple rebounds during the bull market – one at the 50% Fibonacci level and the other at $ 1.90. The above prices have worked on many bullish patterns, making it the ideal platform for buyers to get into.
Traders can long ADA at 50% Fibonacci levels and place a reasonable stop loss at $ 1.98. Lesser risk lovers can wait for the price to drop to $ 1.90. However, traders need to be careful as it closes at the 61.8% Fibonacci level. Short selling would then be the best strategy.
You can see the ADA prices here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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