A recent technical analysis by crypto analyst Ali Martinez, known as @ali_charts on social media, has brought to light a potential sell signal on the three-day chart for Cardano (ADA) against the US dollar. This analysis, shared on X on February 23, has raised concerns among ADA traders due to the emergence of a bearish signal from the TD Sequential indicator.
Martinez’s chart reveals the TD Sequential indicator displaying a ‘9’ signal, which is a classic sell indication suggesting that the current trend may be reaching exhaustion and a reversal could be on the horizon. The appearance of this signal on the candlestick forming over the last three days, as indicated by a red rectangle surrounding a green candlestick, is seen as a warning sign for ADA traders.
It is important to note that this is not the first time such a signal has appeared on Cardano’s chart. Previous instances of the TD Sequential ‘9’ sell signal have been followed by price corrections for ADA. Therefore, traders are advised to be extra cautious as history shows that the last two signals of this nature were succeeded by downward price action.
As of February 23, the ADA/USD pair is showing a complex interplay between bullish and bearish signals on the daily time frame. The chart depicts a constricted pattern following a descent from a local high, with the ADA price currently trading at $0.5790. Despite this, the price remains above key EMAs, indicating underlying bullish sentiment in the market.
The Fibonacci retracement levels drawn from the recent move highlight significant levels of potential support and resistance for ADA. While the 0.236 level at $0.5866 acts as a minor resistance level, the 0.382 and 0.5 levels at $0.5203 and $0.4667 respectively are key support zones to watch 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.
The volume has been relatively consistent, with a slight decrease accompanying the recent price consolidation, signaling a lack of conviction among traders. Additionally, the Relative Strength Index (RSI) at 54 indicates a neutral trend with no clear directional bias at the moment.
While there are hints of bearishness, there are still arguments to be made for a bullish outlook on Cardano. However, traders are advised to closely monitor the price’s behavior relative to key EMAs on the daily chart as a trend change could be imminent. It is essential for investors to conduct their own research and weigh the risks involved before making any investment decisions in the volatile crypto market.
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