The Elliot Wave showed that ADA had slipped below the crucial support.
Signals from the liquidation levels and OI predicted a decrease to $0.42.
More Crypto Online, a crypto channel, disclosed that Cardano’s [ADA] bottom was not yet in, and another decline could be close.
According to the session posted on YouTube, the anchor noted that the Elliot Wave confirmed the signal.
Explaining the thesis, the channel mentioned that,
“We have seen only a 3-wave corrective rally. These are typically not bullish and ADA might break down or movie sideways.”
Sellers are on the offensive side
The Elliot Wave is a technical theory that looks at recurrent price patterns. This way, traders can catch the tops and bottoms of a cycle.
However, More Crypto Online mentioned that ADA’s breakdown below the $0.48 support implied that any bullish bias has been invalidated.
Therefore, the price could slide down Wave 5 which could signal a large degree of downswing. Should this happen, the price of the Cardano native token might slide to $0.42.
As of this writing, ADA’s price was $0.45. This was a 2% decrease in the last 24 hours.
Previously, AMBCrypto reported how the token was showing signs that mirrored its incredible rally in the last 24 bull market.
But if this recent theory holds water, that prediction could be set back. However, technical data alone would not cut it for Cardano. Hence, we checked out the potential of the cryptocurrency from an on-chain angle.
First off, AMBCrypto looked at the Open Interest (OI). For context, OI refers to the sum of all open positions connected to a contract in the derivatives market.
Source: Santiment
An increase in the indicator implies an increase in net positioning. It could also imply that buyers (read longs) are aggressive.
However, Cardano’s OI was $548.6 million at press time— a decrease from the value seven days ago.
The inference in this case is that sellers (shorts) are the aggressive ones. If this decline goes unchecked, the prediction of $0.42 could be validated.
Will ADA move to $0.42?
Besides the OI, we also analyzed the liquidation levels and CLLD. CLLD stands for Cumulative Liquidation Levels Delta (CLLD). Liquidation levels predict price levels where price large liquidations might occur.
With this metric, traders can decide whether to go long or short. For the CLLD, its positive value indicates more long liquidations. On the other hand, negative values of the CLLD suggest more short liquidations.
From the chart below, there was no magnetic zone that could attract a rise in Cardano’s price. But the CLLD was positive, indicating a looming full retrace for Cardano.
Source: Hyblock
Therefore, this bearish bias could restrict ADA from starting an upside movement. For the time being, the price of the token could drop to $0.40. This might be the target in a highly bearish situation.