Cardano: Can shorts take advantage of ADA’s dwindling volume

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

• ADA confined to compact trading range, as buyers were unable to rally. 
• Shorts looked to ramp up selling pressure with a large share of open contracts.

Cardano’s [ADA] dwindling trading volume kept its price action close to the $0.239 support level. A recent price report highlighted the tendency of market participants to book their profits early after a bounce from the support level.

Here’s ADA’s market cap in BTC terms

The quick profits and ADA’s bearish market structure have limited the altcoin’s ability to register sustained gains. With Bitcoin [BTC] dropping back to the $26k price level, ADA sellers could look to flip the support level in the short term.

Range low could cave to selling pressure

Source: ADA/USDT on Trading View

Between 17 August and 24 September, ADA has traded a compact range ($0.238 to $0.28). Despite buyers bouncing from the $0.239 support level, the inability to break above the lower low ($0.28) has stifled the bullish rally.

As of press time, ADA was again close to the range-low with evidence heavily favoring bears. The On Balance Volume (OBV) continued to trend lower while the Relative Strength Index (RSI) remained under neutral 50. Both signaled a lack of bullish momentum and buying pressure.

If bears flip the range-low to resistance, the short-term target lies at $0.22 which was briefly touched on 10 June. Otherwise, bulls could hold the support, although this would be dependent on a good uptick in volume for ADA.

Read Cardano’s [ADA] Price Prediction 2023-24

Speculators increased short positions in anticipation of range breakout

Source: Coinglass

The exchange long/short ratio data revealed the pessimistic outlook for traders in the futures market. The 12-hour timeframe showed that short positions held a 52.61% share of the open contracts.

This translated to a $4.44 million difference between short and long positions. Furthermore, it hinted at another wave of selling pressure which could see ADA drop to $0.22.