Cardano (ADA) broke into an important technical region on January 25, while ADA was trading around $0.3374, after a week of decline of almost 15%, as per CoinMarketCap. The token is now close to a region of demand that has been well-known for a long time and is observed by traders when the market is weak.
Source: CoinMarketap
On the 2-day chart, ADA is still within a clear bearish channel. This indicates that there has been a long period of selling pressure, with lower highs and lower lows.
Each attempt to reverse this selling pressure in the past few months has been halted just before the top of the channel, while the declines have been moving the price towards the bottom of the channel.
Currently, the consolidation around the lower part of the channel may indicate that the selling pressure is abating, at least for the time being.
Market analyst Butterfly stated on January 25 that ADA received support near the lower edge of the price drop channel.
According to the analyst, this area has been a strong support level for the price, and it seems that buyers are accumulating as sellers lose momentum. This is a common phenomenon when prices remain at a lower level for a long time.
Source: X
Also Read: Cardano Price Outlook: Can ADA Reach $1.20 in January?
Descending Channel Still Controls the Broader Structure
According to the data from TradingView, ADA is following the inner path of the downtrend, including the middle line that serves as a balance point. When the price moves away from the middle point, it usually returns to it before the next movement begins.
If the buying pressure is improved, ADA may attempt to return to the middle range of the channel before it encounters resistance. However, upside resistance is still strong.
The top of the channel is around $0.60 to $0.70, which is a region where sellers tend to enter. Even if there is a bounce from the current levels, it would still be a correction unless ADA can manage to stay above the channel.
Source: Tradingview
On the flip side, failure to hold the current demand zone would make the bearish scenario even stronger. Breaking below the $0.33 to $0.32 level could accelerate the decline since the channel formation would remain valid.
Cardano Weekly Indicators Continue to Favor Sellers
The weekly chart presents a cautious scenario. ADA remains below all the major exponential moving averages, indicating that the sellers are still in control of the market. The EMA 20 is approximately $0.50, while the EMA 50, 100, and 200 values are approximately between $0.57 and $0.61.
The view is supported by momentum indicators. The Money Flow Index is close to 16.8, indicating that there are weak money flows into the market, rather than the development of new buying power. The MACD is still negative, and the bearish momentum is increasing.
Source: X
Also Read: Cardano (ADA) Compresses in Tight Range as Triangle Formation Signals Imminent Breakout
