Cardano price could challenge retail bears with an uptrend liquidity hunt
- Cardano price auctions under a broken support zone, which could cause a short-term pullback.
- ADA shows October’s traders in profit, which creates liquidity for market makers in the mid $0.30 zone.
- Invalidation of the bullish potential is a breach below $0.25
Cardano price could make a move to challenge newfound bears in the market. Traders should keep a close eye on the smart contract token to spot a profitable opportunity. Key levels have been defined to gauge ADA's next potential move.
Cardano price is on the cusp
Cardano price is again in a make-or-break situation as traders are honing in to determine which way ADA's consolidation will break. Since the start of the week, the bulls recovered 6% of market losses following a sharp 10% decline over the weekend. On November 23, the Cardano price hovers just below the previously broken support zone, which could act as additional resistance if bulls cannot overcome the boundary.
Cardano price currently auctions at $0.3155. Day traders should keep an eye on the Relative Strength Index (RSI) as it provides context for determining ADA's next move. According to the indicator, the ADA price has created a newfound bearish divergence near a previous support zone. The RSI indicator shows the current price as more overbought than the previous swing highs at $0.31 and $0.34. Based on these metrics, a pullback into the $0.31 zone is expected in the coming days.
ADA/USDT 1-Day Chart
Earlier in the month, on-chain metrics showed retail traders exceedingly positioned short. On October 2, nearly eight of ten traders opened a put between $0.358 and $0.401. Now that bears are in profit, a substantial amount likely resides at the mid $0.35, where bears in profit and break-even have placed safety stops.
Using the on-chain metrics and auction market theory techniques, the ADA token can rise 15% towards the mid $0.35 zone to challenge newfound bears in the market. The recently breached and untested 21-day simple moving average lies in the same area, providing additional confluence for a bullish target zone.
Invalidation of the bullish scenario could arise if the bears breach of the 2020 liquidity levels at $0.25. If the ADA price breaks this area, the entire uptrend scenario would be void, and the ADA price could fall into the $0.20 zone, resulting in a 40% decrease from the current Cardano price.
In the following video, our analysts deep dive into the price action of Cardano, analyzing key levels of interest in the market. -FXStreet Team
Author
Tony M.
FXStreet Contributor
Tony Montpeirous began investing in cryptocurrencies in 2017. His trading style incorporates Elliot Wave, Auction Market Theory, Fibonacci and price action as the cornerstone of his technical analysis.
