According to Cointelegraph, Cardano (ADA) has experienced a significant price increase of 140% in November, largely attributed to Donald Trump's reelection as the President of the United States. However, technical indicators suggest that these gains might not be sustainable, with a potential correction looming.
Cardano's ADA is currently exhibiting signs of a possible downturn, as a bearish 'rising wedge' pattern emerges on its 4-hour chart. This pattern, characterized by upward-sloping converging trendlines, often indicates a potential reversal to the downside. If ADA breaks below the wedge's lower trendline, the price could drop to the height of the wedge's widest part, projecting a short-term target near $0.598 and a more extreme bearish scenario at $0.513 for the November-December period. Notably, the $0.513 level aligns with the 200-4H exponential moving average (EMA), suggesting a 35% decline from current levels.
The volume has been decreasing during ADA's recent upward movement, signaling a weakening rally. Bearish patterns like the rising wedge are more reliable when accompanied by declining trading volumes. Additionally, Cardano's chart reveals a growing divergence between rising prices and a falling relative strength index (RSI), indicating bearish divergence and weakening upward momentum. The RSI is currently at 68, nearing the overbought territory of 70, further suggesting that ADA may be approaching an overextended phase, potentially leading to a price correction.
On the weekly chart, a decisive breakout above the wedge's upper trendline, especially with increased volume, could invalidate the bearish outlook. Such a move might pave the way for testing the $0.90 resistance level, which aligns with the 0.236 Fibonacci retracement trendline. Historically, $0.90 has been a strong distribution level since April 2022, with ADA experiencing significant drops after testing it as resistance. If a similar correction occurs during the November-December period, Cardano's next downside target on the weekly chart appears to be its resistance-turned-support descending trendline, aligning with its 200-week EMA at around $0.476, marking a potential 40% decline from current levels.
Despite these technical challenges, Cardano's fundamentals have improved following Trump's reelection. His administration has pledged to avoid stringent crypto regulations, which could boost demand for cryptocurrencies like ADA in 2025. This article does not provide investment advice or recommendations. Readers should conduct their own research before making investment decisions.
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