Cardano Faces Major Resistance: ADA at Risk of Potential Pullback
- ADA faces significant resistance at $0.39 with 2 billion tokens held by 161,740 addresses.
- Recent surge in profit-taking, with 4 billion ADA transacted on October 14.
- Head and shoulders pattern suggests potential pullback to $0.31, unless buying pressure increases.
Cardano (ADA) finds itself at a critical juncture as it approaches a formidable resistance level, despite recent price appreciation. This resistance stems from a substantial number of addresses holding ADA at unrealized losses, potentially poised to exit their positions.
The current market sentiment remains divided, with the possibility of a correction or consolidation looming if ADA fails to breach this barrier.
The In/Out of Money Around Price (IOMAP) model reveals a significant resistance zone at $0.39, where approximately 161,740 addresses hold over 2 billion ADA tokens.
This concentration of out of the money addresses suggests a potential sell wall, as holders may be inclined to liquidate their positions to mitigate losses. The strength of this resistance could prove challenging for ADA to overcome without substantial buying pressure.
Cardano experiences surge in profit taking
Adding to the bearish signals, Cardano has experienced a surge in profit-taking. Santiment data indicates that daily on-chain transactions in profit spiked to 4 billion ADA on October 14, representing approximately $1.44 billion in realized gains.
This increase in selling activity could potentially outweigh upward momentum, making it difficult for ADA to sustain further price appreciation.
Technical analysis of ADAs daily chart reveals the formation of a head and shoulders pattern, typically interpreted as a bearish reversal signal. This pattern suggests that Cardanos recent uptrend may be nearing its conclusion, potentially leading to a price retracement towards the $0.31 level.
However, the bearish scenario could be invalidated if a substantial surge in buying pressure materializes. For ADA to overcome the current resistance and continue its upward trajectory, trading volume would need to match or exceed the levels observed at the $0.39 resistance point.
In such a scenario, Cardano could potentially rally towards $0.45, reversing the bearish pattern and resuming its upward movement.
Read more: https://thenewscrypto.com/cardano-faces-major-resistance-ada-at-risk-of-potential-pullback/
Text source: TheNewsCrypto – Blockchain & Cryptocurrency News M
