Cardano Price News: Bearish Breakout of Pennant Pattern Could Result in 18% Loss for ADA

Trading volumes have subsided lately as market volatility has moved back to normal levels.

Other cryptocurrencies like Ethereum (ETH) and XRP (XRP) have experienced more pronounced losses of 5.2% and 5% respectively during this same period as the rally that started on March 11 seems to be taking a breather.

Earlier this week, one of Latin America’s largest online banks, Nubank, announced that they will start to offer Cardano (ADA) to customers of their crypto investment platform.

ADA was included alongside NEAR, ATOM, and ALGO and comes to join another 16 cryptocurrencies like BTC and ETH that Nubank has already made available to its more than 100 million customers.

Listings like this help raise awareness about blockchain projects like Cardano (ADA) and increase transaction volumes in the near term.

“Touted as an “Ethereum killer,” it is one of the largest tokens in the market, known for its speed and low transaction cost,” Nubank stated about ADA’s inclusion to its portfolio of supported assets in a press release published on March 25.

Meanwhile, the founder of Cardano, Charles Hoskinson, met with top executives from World Liberty Financial (WLFI), including Donald Trump’s son – Donald Jr. – to discuss how decentralized finance (DeFi) can help expand global access to digital assets.

This conversation was deemed relevant by the Cardano community as it evidenced the project’s ties and efforts to meet with elite organizations with a growing influence in this space, especially in the United States.

Bears Are Still in Control of Cardano’s Price Action

Looking at the charts, Cardano (ADA) bears are still in control of the price action as the price has been in consolidation for the past week. The token has now shed most of the gains it experienced ahead of the FOMC meeting and it is currently tagging the lower bound of a bearish pennant pattern.

Pennants are a continuation setup that occurs when sellers take a pause as they take some profits off the table from the latest downturn.

ADA’s momentum has been stalled in the past few days as the Relative Strength Index (RSI) has flattened, moving within the 40 and 50 levels without establishing a clear direction yet.

As the chart’s dominant trend is bearish, this trading pattern has the odds in its favor. A break below the $0.650 level would confirm the pennant’s bearish bias and could push ADA to the $0.575 level, resulting in a total downside risk of nearly 18%.

ADA Retraces as RSI Hits Oversold Levels

Heading to the hourly chart, ADA has found support temporarily at the $0.694 level after the American session began.

If this support holds in the next few hours we could see ADA bouncing off this area as the Relative Strength Index (RSI) is stepping off oversold levels. However, as the dominant trend is bearish, this retrace could give late sellers the chance to enter a short position at an advantageous price point.

Traders could keep an eye on the price action as the price tags the 23.6% and 0.382% Fibonacci as a rejection of a move above any of these levels could result in further drops for ADA. If the price retraces after hitting some of these marks, it would raise the odds that ADA will make a lower low shortly.

Given that ADA is coming out of oversold levels, it would not be abnormal that the price could rise to tag the 50% Fibonacci level. At that point, the odds would still favor a bearish outlook but short-sellers would risk getting caught up in a full-blown trend reversal.

A near-term exit target for a short-position for ADA could be set at $0.6915 first or $0.6815 depending on where the entry is.