Cryptocurrency analyst Ali Martinez, also known as @ali_charts, recently conducted a technical analysis that pointed towards a potential sell signal on the three-day chart for Cardano (ADA) against the US dollar. This analysis, shared on X on February 23, highlighted the appearance of a bearish signal from the TD Sequential indicator. The TD Sequential indicator presented a ‘9’ signal, which is considered a classic sell indication that suggests the current trend may be exhausted, and a reversal could be on the horizon. This signal was marked by a red rectangle surrounding a green candlestick in Martinez’s chart, indicating that ADA’s recent upward momentum may face a setback.
Martinez’s analysis also noted that this was not the first instance of such a signal appearing on Cardano’s chart. Previous occurrences of the TD Sequential ‘9’ sell signal were followed by price corrections for ADA. Traders are advised to be extra cautious as the chart indicates that the last two signals of this nature were succeeded by downward price action. Martinez emphasized the significance of this signal by stating, “The TD Sequential indicator shows a sell signal on the #Cardano 3-day chart. It’s important to note that the last two times this indicator signaled bearish, ADA experienced a price correction!”
Current Market Outlook
As of February 23, 13:06 UTC, the ADA/USD pair displayed a complex interplay between bullish and bearish signals on the daily time frame. The chart depicted a constricted pattern following a descent from a local high, with ADA’s price trading at $0.5790. Noteworthy is the price’s positioning above the 20-day Exponential Moving Average (EMA) at $0.5733, along with other EMAs such as the 50-day EMA at $0.5462, the 100-day EMA at $0.5065, and the 200-day EMA at $0.4487, reflecting potential bullish sentiment in the market.
Support and Resistance Levels
Fibonacci retracement levels drawn from the peak to the trough of the recent move identify significant support and resistance levels for ADA. The 0.236 level at $0.5866 acts as a minor resistance level, while the 0.382 level at $0.5203 and the 0.5 level at $0.4667 serve as key support zones to monitor in case of a bearish reversal. A break below these levels could signal a deeper retracement towards the 0.618 level at $0.4131 or even the 0.786 level at $0.3368. Of utmost importance currently is the 20-day EMA, indicating a potential trend shift.
Despite the consistent volume and slight decrease in trading volume during the recent price consolidation, traders’ conviction may be lacking. The Relative Strength Index (RSI) at 54 suggests neutrality without any clear directional bias at the moment. While there are hints of bearishness, there are also compelling reasons to remain bullish on Cardano and not await a significant correction. However, failure to maintain prices above key EMAs on the daily chart could confirm a trend change.
The bearish signal for Cardano outlined in Martinez’s analysis calls for vigilance among ADA traders. While there may be opportunities for price corrections, a comprehensive assessment of support and resistance levels, along with EMAs and signals like the RSI, can provide valuable insights for informed trading decisions. As with any investment, conducting thorough research and evaluation is essential to navigate the risks associated with cryptocurrency investments.
