Recent technical analysis by crypto analyst Ali Martinez, also known as @ali_charts, has highlighted a potential sell signal on the three-day chart for Cardano (ADA) against the US dollar. The analysis, shared on X on February 23, points to caution among ADA traders due to the appearance of a bearish signal from the TD Sequential indicator.
The TD Sequential indicator presents a ‘9’ signal, a classic sell indication that suggests the current trend may be exhausted and a reversal could be imminent. This signal is prominently featured on the candlestick forming over the last three days, enclosed by a red rectangle surrounding a green candlestick. The ‘9’ setup is traditionally seen as a sign to take profits or prepare for a trend change, indicating that ADA’s recent upward momentum may face a setback.
This recent sell signal on Cardano’s chart is not the first of its kind. Previous occurrences of the TD Sequential ‘9’ sell signal were followed by price corrections for ADA. The historical data suggests that traders should be particularly vigilant now as the last two signals of this nature were succeeded by downward price action.
Ali Martinez emphasized the significance of this sell 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!”
As of February 23, 13:06 UTC, the ADA/USD pair is showing a complex interplay between bullish and bearish signals on the daily time frame. The chart reveals a constricted pattern following a descent from a local high, with the ADA price currently trading at $0.5790.
Importantly, the price is positioned above key Exponential Moving Averages (EMAs) such as the 20-day EMA at $0.5733, the 50-day EMA at $0.5462, the 100-day EMA at $0.5065, and notably, the 200-day EMA at $0.4487. This positioning above the EMAs could indicate an underlying bullish sentiment in the market.
The Fibonacci retracement levels provide insights into potential support and resistance levels for ADA. The 0.236 level at $0.5866 acts as a minor resistance, while the 0.382 level at $0.5203 and the 0.5 level at $0.4667 are 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. However, the most critical support currently is the 20-day EMA, which could indicate a possible trend change.
The volume has been relatively steady, with a slight decrease in trading volume during the recent price consolidation. This could suggest a lack of conviction among traders. Additionally, the Relative Strength Index (RSI) stands at 54, indicating neither overbought nor oversold conditions. The neutral RSI trend provides no clear directional bias at the moment.
Overall, while there are indications of bearishness, there are still arguments to be bullish on Cardano and not wait for a significant correction. Nevertheless, monitoring key EMAs on the daily chart is crucial, as a failure to hold above them could confirm a trend change.
The potential sell signal on Cardano’s three-day chart warrants caution among traders, indicating a possible trend reversal. While historical data and technical indicators provide valuable insights, it is essential for traders to conduct their research and analysis before making any investment decisions in the volatile cryptocurrency market.
Featured image created with DALL·E, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only and does not represent the opinions of NewsBTC regarding investment decisions. Investing in cryptocurrencies involves risks, and readers are advised to conduct their research before making any investment decisions. Use information provided on this website at your discretion and risk.
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