- Cardano appeared to be on the verge of establishing a bearish market structure on the 1-day chart
- Santiment data showed network-wide accumulation since April
Cardano [ADA] has traded within a range since December. Over the past three weeks though, a miniature range has formed near its long-term range lows. The buying pressure was there, but the momentum was not.
Source: ADA/USDT on TradingView
On the 1-day chart, the Bollinger Bands were relatively wide, signaling that some volatility was present. Even though the token was trading within a three-week range, it had a bullish market structure at press time. This flip occurred after it recovered and reclaimed the range low at $0.68 as support.
The subsequent rally in early May established a bullish trend, with a higher low set at $0.74. At the time of writing, ADA was trading below this level, threatening a bearish structure shift.
In fact, the price was below the 20-period moving average, implying bearish short-term momentum.
Cardano bulls have their work cut out for them
Source: ADA/USDT on TradingView
The short-term range (white) climbed from $0.73 to $0.84, with the mid-range level at $0.78. The Bollinger Bands were relatively tight around the altcoin’s price action on the 4-hour chart as the price slowly sank towards $0.73 over the last five days.
The moving averages showed that momentum was bearish on the H4 chart. The trading volume has declined since 24 May, but sellers have been dominant over the past three days – As evidenced by the OBV’s gentle decline.
A price drop to $0.71-$0.725 should offer Cardano bulls a buying opportunity. Even though it appeared risky at press time.
Finally, Santiment data revealed that short to medium-term holders were at a tidy profit. The 90-day MVRV was at 26.5%. However, long-term investors were not at high profit levels, with the 365-day MVRV at just 8%.
Therefore, there appeared to be some threat of profit-taking from medium-term holders. Such a wave of selling would likely see a flurry of on-chain movement and show up on the mean coin age metric.
The MCA seemed encouraging for investors because it has trended sharply higher since the second week of April. The latest price decline was not accompanied by an intense wave of selling.
The metric indicated that bulls were strong enough to defend the $0.73 range low. Sustained network-wide accumulation would signal that Cardano may be ready to move beyond the short-term range highs.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
