Cardano Price Analysis: ADA on the cusp of dumping to $0.13 as supply intensifies

Cardano recently traded a yearly $0.183, but the uptrend was cut short. ADA has confirmed support at $0.12, but the mission to hit new annual highs seems to have stalled.

Cardano is trading at $0.154 at the time of writing. A breakdown appears to be in the offing based on the likely breakout from the symmetrical triangle pattern.

Cardano downside eyes $0.13

Immediately above the prevailing price level, ADA/USD’s movements are limited by the 100 Simple Moving Average. In other words, price action towards $0.16 (50 SMA) is an uphill battle.

On the other hand, a correction is likely to come into play if Cardano closes the day under the 100 SMA. In the event the bearish leg extends under the symmetrical triangle, massive sell orders would be triggered. The intense bearish volume could force ADA downstream to seek refuge at the 200 SMA, currently at $0.13.

The Relative Strength Index has reinforced the bearish scenario after forming a bearish divergence. The RSI’s bearish divergence is created when the price forms a higher low pattern while the indicator sets a lower high pattern. The bearish outlook shows that buying volume is decreasing, and a correction is brewing.

ADA/USD 4-hour chart

Looking at Cardano’s network growth model by IntoTheBlock, a reduction in the number of new addresses created on the network is a bearish signal. The addresses almost hit 15,000 a day on December 1, following a significant upsurge in the price to $0.16.

Currently, the addresses have dropped considerably to approximately 8,900 as recorded on December 7. If an upswing fails to come into play, Cardano’s breakdown to $0.13 would be validated. Note that a decrease in new addresses negatively affects the inflow and outflow of tokens on the platform.

Cardano network growth chart

It is worth noting that the bearish narrative will be invalidated if Cardano stepped above the 100 SMA. This would encourage buyers to return to the market. Creating enough volume might lift ADA significantly above the triangle and perhaps see it revisit the yearly high.