Cardano forms a double top – Are we likely to see a price decline?

Cardano forms a double top – Are we likely to see a price decline?

By Motiur Rahman - min read
  • Cardano’s ADA has been surging for the last two weeks

  • The token was rejected twice at the resistance resulting in a double top

  • ADA could slide, but investors should be keen on a potential breakout

Double tops and double bottoms are important price action signals in financial markets. The “tops” are seen as price peaks and are potential signals of an oncoming bear market. The “bottoms” are interpreted similarly and suggest a potential price jump. 

Cardano ADA/USD is one of the cryptocurrencies that has remained bullish since mid-July. The crypto token rose to a high of $0.54 on July 20 from $0.41 on July 14. That happens amid an increase in whale activity on the network and as most cryptocurrencies gained. After trading slightly above or at resistance, bull exhaustion is evident. We believe ADA could fall further, but investors need not to panic.

ADA under pressure as double top forms at resistance

Source – TradingView

ADA price is under pressure after forming a double top slightly above the $0.52 resistance. The rejection of the price at the same level confirms buyer exhaustion. As a result, ADA will continue to fall in the short term. However, it also communicates that buyer interest remains strong in ADA. That was after buyers tried to clear the $0.52 for the second time. 

ADA has broken below the 14-day and 21-day moving averages. That confirms a slight bearish pressure in the short term. The token has a minor support at $0.48., where the price is likely to settle. A further drop could see ADA settle at $0.44.

Concluding thoughts

Although ADA is under pressure from the double top, buyer interest remains high. We expect only a short-term drop. ADA will see lasting recoveries if it overcomes the consolidation by breaking past the $0.52 resistance.