Should Cardano holders be prepared for a price correction?
- Cardano’s RSI was overbought, and liquidation has increased.
- Most market indicators also remained bearish on ADA.
Cardano [ADA] had a comfortable week as its price rallied by more than 20%. Though this uptick looked promising, such unprecedented surges are often followed by a certain degree of price correction. In fact, the token was already showing signs of a downtrend.
Are Cardano investors earning profits?
According to CoinMarkatCap, ADA has surged by over 20% in the last seven days, accompanied by a considerable hike in the token’s trading volume. This suggested that Cardano investors were enjoying profits.
However, despite the price hike, the reality seemed to be different.
As per IntoTheBlock’s data, more than 60% of ADA investors were ‘out of money.” This meant that the current price of ADA was lower than its average cost.
If the latest data is to be considered, ADA investors have more reasons to worry as the token might witness a price correction.
— Ali (@ali_charts) November 7, 2023
Ali, a popular crypto analyst, recently revealed in a tweet that the TD Sequential presents a sell signal on the ADA daily chart. The tweet also mentioned that he expects ADA to reset to a support level of $0.30 in the days to follow.
Selling pressure on ADA is increasing
Cardano’s price has already started to go down, as its daily chart was red.
Over the last 24 hours, ADA’s value dropped by 0.45%, and at press time it was trading at $0.3543 with a market capitalization of over $12.4 billion.
AMBCrypto’s analysis of Hyblock data revealed that ADA’s liquidation increased on two occasions over the last few days.
As per the chart, Cardano’s liquidation increased on the 6th of November 2023, when the token’s price reached $0.37.
A similar increase in liquidity was also noted on the 7th of November when Cardano’s value reached $0.35.
Not only that, but selling pressure on the token might increase further in the coming days. This was evident from CryptoQuant’s data, which revealed that ADA’s Relative Strength Index (RSI) was in an overbought zone.
Read Cardano’s [ADA] Price Prediction 2023-24
Another concerning metric was ADA’s funding rate. AMBCrypto found out that when ADA’s price went up on the 7th of November, its funding rate dropped slightly. This meant that derivatives investors were reluctant to buy the token at a higher price.
Additionally, ADA’s price touched the upper limit of the Bollinger Bands. Its Money Flow Index (MFI) also registered a downtick, further increasing the chances of a continued downtrend.