Cardano (ADA) has seen a remarkable rise in its price, skyrocketing 140% during November 2023. This surge has largely been attributed to the recent reelection of Donald Trump as the President of the United States, prompting a wave of optimism among crypto investors. However, the chart analysis indicates that ADA might be on the brink of a significant correction, potentially losing up to 40% of its recent gains by the end of December.
The current technical indicators paint a concerning picture for Cardano holders. According to the 4-hour chart, ADA is nearing the apex of a classic rising wedge pattern, which historically signals an impending price drop. Should ADA break below the lower trendline of this wedge, analysts predict a possible downside target of $0.513, roughly 35% lower than current price levels. This projection corresponds with key technical levels, including the 200-4H EMA, further emphasizing the potential for continued bearish movement.
Moreover, there are signs of weakening market momentum, as observed in the declining trading volumes during the recent upward trend. This downgrade in volume coupled with the formation of a bearish wedge is indicative of increasing risk among traders, suggesting that the rally lacks the necessary support to continue its ascent.
The Relative Strength Index (RSI) also suggests a cautionary stance, currently sitting at 68—just shy of the overbought threshold. Historically, such high RSI figures often precede retracements, reinforcing the argument for an impending correction. Should ADA fail to maintain its uptrend and instead enter a corrective phase, it may further test levels around $0.476, representing a significant decline from its peak prices.
In the event of a positive breakout above the wedge’s upper trendline, particularly with increased volume, the market could witness a shift in sentiment. A break above could redirect ADA towards the $0.90 resistance level, which has proven to be a formidable barrier in the past.
While challenges remain for Cardano in the near future, it is essential to consider the broader context. The recent election results and Trump’s promises regarding cryptocurrency regulation could play a pivotal role in shaping investor sentiment and demand for ADA going forward. Nevertheless, traders are advised to approach with caution and conduct thorough research before making investment decisions.
