Cardano cracks $0.3 support: Can shorting yield gains?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- ADA cracked the $0.3 support and flipped it to resistance.
- The spot and futures market had a bearish bias.
Bitcoin’s [BTC] continued weak price action has exposed most altcoins to record losses, presenting shorting opportunities along the way. In particular, Cardano [ADA] shed over 20% after dropping from mid-July’s high of $0.38 to <$0.30 at the press time.
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BTC’s price action was still weak into the weekend (5-6 August) and could present another shorting opportunity for late ADA sellers at this level.
Will ADA’s price slump further?
Key price chart indicators flashed mixed signals. For example, the Relative Strength Index chalked lower highs since late July, illustrating increased selling pressure over the same period.
However, the Chaikin Money Flow made higher highs, highlighting significant capital inflows to ADA’s market in the same period. But it’s worth noting that the metric has wavered near the threshold, indicating capital inflows eased in the past few days.
The above negative readings reinforced sellers’ leverage after they cracked and flipped $0.3 support to resistance. If the bearish pressure persists, ADA could drop to early July support of $0.276. If so, shorting at press time levels near $0.3, targeting $0.276, could offer a good risk ratio.
An H4 candlestick session close above $0.30 will invalidate the above short idea. So, the $0.3 will be the stop loss and exit target for the short idea.
The bears had leverage
According to CryptoMeter, ADA’s spot market was dominated by sellers at the time of writing. There was an overwhelming sell volume at >54.9% against a buying volume of 45.1%. It showed that more traders were shorting the asset in the spot market at press time.
How much are 1,10,100 ADAs worth today?
A similar bearish sentiment was recorded in the futures market too. The Open Interest declined since mid-July, falling from >$140 million to <$130 million at press time. This underscores a decline in demand for ADA in the futures market over the same period.
In addition, futures market volume dipped by >20%, with more long positions wrecked across all timeframes, as per Coinglass. The negative readings from the futures market suggest a likely downward spiral, especially if BTC records more losses in the next few hours/days.