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While Cardano’s market was building up to an ascending triangle breakthrough last week, its market structure quickly became negative. Losses over the past three days totalled 10% as ADA failed to hold the $1.40 level – something that was required to ensure a bullish conclusion.
At the time of writing, ADA was trading at $1.32, down 2.6 percent in the previous 24 hours.
Cardano 12-hour chart
After failing to break above the 50 percent Fibonacci extension, which also formed the upper trendline of an ascending triangle, ADA has been under some negative pressure in recent days. The price of the alt fell below the 12-hour 20 (red) and 50 (yellow) Simple Moving Average lines, triggering a breach below the 38.2 percent Fibonacci threshold ($1.35).
The 23.6 percent Fibonacci extension was trading at $1.22 and might be ADA’s next target. On June 26, the aforementioned level triggered a rally, and curiously, the Visible Range’s POC also rested at this level, fortifying its defences. These were credible indicators that ADA might squeeze incoming losses at $1.22 in the next days.
As it traded in negative territory, the Relative Strength Index fell below its lower trendline and indicated a drop leg. The Directional Movement Index showed that the ADA’s trend shifted negative on July 7th, when the -DI line crossed above the +DI line. However, a low ADX reading of 15 showed that the market was less directional and that future losses may not be as severe.
The Squeeze Momentum Indicator indicated falling positive momentum, but volatility had yet to rise as the market remained in a squeeze.
Despite the emergence of a bearish trend in the ADA market, the absence of volatility held losses in control. ADA found some support at $1.28, and sideways movement is to be expected until volatility kicks up. If the bulls suffer another setback, ADA will most likely go towards its 23.6 percent Fibonacci extension at $1.22 before stabilising.