How ADA short sellers can deploy this strategy to stay profitable
Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
After struggling to break the midline shackles of its rising channel (yellow, dotted), Cardan [ADA] has seen an expected outage over the past few days.
This drop fixed its position below the EMA ribbons to reflect broader bearish momentum. The bulls could now aim to continue the ongoing compression ahead of a plausible breakdown. At press time, ADA was trading at $0.4652.
ADA daily chart
After hovering in the lower half of the ascending channel for two weeks, ADA broke its boundary below and headed for a bearish trail.
This breakdown broke the compression phase of the coin to reveal a bearish edge. The movements over the past few days hinted at a bearish flag pattern in the daily timeframe.
To top it off, the downward trend in volume as the pattern forms makes the altcoin more susceptible to a potential breakdown.
A convincing close below the $0.45 level could help the alt retest the $0.41-$0.43 range in the coming sessions. Thus, the next candlesticks could confirm the chances of a continuation of the downtrend.
The bearish crossover on the 20/50 EMA has further reiterated the short-term bearish edge. A possible close above the 20 EMA would suggest a bearish invalidation.
The Relative Strength Index (RSI) emphasized its bearish stance after finding support in the 35 region. return.
Also, the south-pointing Moving Average Convergence Divergence (MACD) the lines dipped below zero after a month to reveal a robust selling edge. Additionally, the fall of the volume oscillator below the zero level revealed a bearish divergence with the price action.
Given the bearish flag pattern forming below the southbound EMA ribbons, sellers might be looking to exude pressure. ADA buyers need to propel a jump above the 20 EMA to invalidate this pressure. Potential targets would remain the same as above.
Nonetheless, traders/investors need to closely monitor Bitcoin’s movement and its effects on the broader market to make a profitable move.
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