Cardano (ADA) – Expected to come under intense selling pressure following the double top formationPosted on Wednesday, April 6 2022 at 9:09 pm GMT+0000
Cardano (ADA) has completed a double top formation on the four-hour chart after an aggressive rally over the past couple of weeks.
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset’s price falls below a support level equal to the low between the two prior highs.
In trend indicators, the 20- and 40-period exponential moving averages completed a bearish crossover, confirming the negative shift in the short-term picture. Additionally, the DI- and DI+ lines are negatively aligned and diverging while the RSI has just dipped into oversold waters.
Following the firm breach of the pattern’s neckline at 1.10, Cardano officially opened the gate towards the Fibonacci golden number at 1.02, where bears might pause temporarily before reaching the pattern’s target at 0.97. Further lower, the sell-off will accelerate towards the 261.8% Fibonacci extension at 0.88.
A move to the upside might see immediate resistance at 20- and 40-period EMAs at the area of 1.60 – 1.64 but should the market increase positive momentum above these lines, the 1.24 level marked by the double top will be the next level in focus.
To summarize, negative risks seem to be increasing, and Cardano is expected to come under renewed selling pressure following the recent dip below 1.10.