The launch of the Midnight’s [NIGHT] native token came at a time when Cardano holders were facing heavy losses.
Those losses represented an “extreme buy” event for Cardano, and a rally could have been catalyzed by the Midnight sidechain launch.
A week before the 8th of December NIGHT launch, Cardano [ADA] token prices began a rally from $0.37. By the 9th of December, they were able to drive a 30.6% move to $0.484. However, the rally ended there.
The inability of the bulls to sustain the pressure and reclaim the $0.52 long-term resistance level meant that the bullish strength was no reliable strength after all.
Cardano indicators signal a strong downtrend in progress
On the 1-day chart, the swing low at $0.405 was under threat from sellers. A daily close below this level would shift the structure bearishly.
Further south, the $0.37 was another key support level. A breakdown below these two would herald the downtrend’s continuation.
The CMF showed that selling pressure was rising once again, with a drop below -0.05. Significant capital outflows confirmed what the DMI had been showing since the 10/10 crash.
Taken together, the daily indicators suggested the bearish trend remained intact.
The bullish Cardano argument
The 1-month Liquidation Heatmap showed a build-up of short liquidations above the recent swing high at $0.48. This magnetic zone could pull prices higher, like it did earlier this month.
While there was a sparsity of liquidations between $0.4 and $0.5, the $0.43-$0.44 pocket could oppose a quick rally.
Traders’ call to action- be prepared for bearishness
The price action on the daily chart showed that the structure remained bullish. However, the technical indicators and the recent Bitcoin [BTC] volatility did little to aid the ADA bulls.
Moreover, the rally that stalled at $0.48 was not halted at $0.45 or $0.43. This indicated a lack of buying pressure, which the CMF confirmed.
Therefore, traders can watch out for a drop below $0.405. Such a drop, followed by a retest of the same level as resistance, could offer a selling opportunity.
Final Thoughts
- Traders looking for the downtrend to continue, be warned- the Bitcoin volatility could mess with a bearish continuation. Monday’s price action could give clues for next week’s moves.
- If the $0.405 level is defended and Cardano climbs back above $0.43, bulls have reason to be cautiously optimistic.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
