The price of Cardano (ADA) surged 140% in November, primarily due to Donald Trump's re-election as President of the United States.
However, some indicators suggest that much of ADA's gains driven by Trump may decline in the coming days.
ADA signals a 35% correction due to weaker technicals
The price of Cardano is showing potential risk as a bearish 'rising wedge' pattern forms on its 4-hour chart.
The technical structure, characterized by converging upward resistance levels, often signals a reversal of the downward trend.
If ADA breaks below the lower resistance level of the wedge, the collapse could be as deep as the height of the widest part of the wedge.
This anticipates a potential price target near $0.598 in the short term and $0.513 in a stronger bearish scenario during the November-December period.
ADA/USD 4-hour price chart. Source: TradingView
Interestingly, the level of $0.513, a decrease of about 35% from the current price, corresponds to the 200-4H exponential moving average (200-4H EMA; blue wave).
Volume has decreased while ADA's price has recently increased, which is another warning signal of weakening momentum. Bearish patterns, such as rising wedges, are more reliable when accompanied by declining trading volume.
Furthermore, Cardano's chart shows an increasing divergence between rising prices and declining relative strength index (RSI), indicating a bearish divergence, which further signals weakening bullish momentum.
The RSI is at 68, close to the overbought zone at 70, suggesting further that ADA is approaching an overbought phase, which could lead to a price correction.
Cardano's weekly chart supports a selling scenario
A decisive breakout above the upper resistance of the wedge, especially with high volume, could invalidate the bearish outlook.
This move could open the door to test the resistance level of $0.90, which aligns with the Fibonacci resistance level of 0.236 on ADA's weekly chart.
Weekly ADA/USD price chart. Source: TradingView
From a technical analysis standpoint, $0.90 has served as a strong distribution level since April 2022.
For instance, ADA dropped 65-75% after testing as a resistance level in March 2024 and April 2022, which also places a similar correction in the November-December timeframe as a possibility.
If this occurs, Cardano's next bearish target on the weekly chart appears to be the resistance level turning into support, aligning with the 200-week EMA (blue wave) at around $0.476. This level is approximately 40% lower from the current price.
ADA's weekly RSI, currently more than seven points above the overbought threshold at 70, supports the long-term corrective scenario.
On a brighter note, the fundamentals of Cardano have improved thanks to Trump's re-election.
His administration has promised to avoid strict regulations with cryptocurrencies, which could boost demand for coins like ADA in 2025.
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