Cardano (ADA) has shown resilience in recent days, bouncing back with a 4% recovery. However, the coin now seems poised to test its ascending trendline support once again. The bearish market sentiment, exacerbated by the recent security breach on Bybit, has weighed on the cryptocurrency, prompting concerns among investors about ADA’s ability to maintain momentum.

Cardano’s Current Market Momentum

As ADA nears its support zone, the next few hours will be critical in determining its trajectory. If ADA manages to hold steady and avoid a significant sell-off, the price could stabilize at the trendline. However, if selling pressure intensifies, it could trigger a continued downward movement. Investors and traders are keeping a close watch on whether ADA can sustain its recent recovery or whether the current market conditions will result in further losses.

ADA Technical Indicators and Key Levels

Looking at ADA’s technical setup, the asset still holds significant upside potential, provided it remains above the key ascending trendline, currently around the $0.73 mark. On both the daily and four-hour timeframes, ADA appears to be forming a bullish cup-and-handle pattern along with an ascending triangle pattern, indicating a favorable outlook for the cryptocurrency. If ADA can break through the $0.78 level, a move toward $0.85 is possible.

However, market sentiment has been less than optimistic, and should ADA fail to maintain the $0.74 level, it could face a more pronounced downturn. A close below this level could signal a major sell-off, pushing ADA to lower support zones around $0.65. Currently, ADA is trading below the 200 Exponential Moving Average (EMA) on the four-hour chart, which suggests that the coin is still in a downtrend. The Average Directional Index (ADX) is at 12, pointing to a weak trend, which may explain why ADA has struggled to generate significant upward movement.

Market Sentiment and Over-Leveraged Positions

Market sentiment surrounding ADA remains cautious, with many traders hesitant to make large moves in either direction. At the $0.76 level, long positions are highly over-leveraged, with around $2.23 million in open positions. On the flip side, there is also considerable short interest at the $0.785 level, with traders holding approximately $2 million in short positions. This indicates that both bulls and bears are heavily invested in ADA, but the market has yet to show a clear directional bias.

Given the high level of over-leveraged positions, the price could remain volatile, particularly if these positions get liquidated. If the bulls continue to dominate, ADA might manage to stay above the crucial trendline, providing a foundation for potential gains. However, should the bears take control, ADA could struggle to maintain its current levels and face a pullback toward lower price ranges.

Trading Volume and Investor Sentiment

As of now, ADA is trading at around $0.77, with a slight 0.50% increase in the past 24 hours. Despite the modest uptick, the trading volume has dropped significantly by 50%, signaling a decline in market participation. This decline in volume indicates a lack of confidence among traders, who may be hesitant to make significant moves given the current uncertainty. The reduced volume suggests that market sentiment is subdued, with investors waiting for clearer signals before committing to new positions.

Conclusion

Cardano (ADA) finds itself at a crossroads. While it has shown signs of recovery, the bearish market sentiment and the recent drop in trading volume highlight the risks associated with the asset. ADA’s ability to hold above the key trendline support at $0.73 will determine whether it can maintain upward momentum. If the price falls below this level, a deeper pullback may occur, with potential support around $0.65. Traders should be vigilant in monitoring ADA’s price action over the coming days to determine whether the current bearish trend will continue or if the coin will break higher.

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