Cardano (ADA) Faces $0.25 Rejection, Traders Watch for Retracement

Cardano [ADA] is down 5% in the past 24 hours, but has rallied 20% over the past week and nearly 30% in a month. Despite the short-term setback, the trend appeared to be favoring the bulls.

The selling pressure in recent hours was not extreme. The Open Interest slumped by 6.5%, and the spot CVD saw a slight slump. Together, the indicators presented the case of a minor reset in market sentiment and willingness to remain bullish.

The price structure and magnetic zones helped reveal what could be in store next for Cardano.

On the 1-day timeframe, the market structure was bullish.

Since June, the swing highs have been breached, and higher lows have been formed since then. The latest higher low, at $0.177, is the level the bulls must defend in order to keep the upward structure intact.

The $0.25 resistance zone marked a local high made during the sell-off in May. It also represented the supply zone that Cardano was stuck at in April.

A price move into this supply zone and an 18.6% correction within five days indicated a short-term parabolic move and heavy profit-taking. The bullish swing structure remains, but short-term sentiment might be muted.

In August, several short liquidations had built up from $0.18 all the way up to $0.22. Within a few days, these short liquidations were wiped out as Cardano prices rallied hard to reach the $0.25 area.

Generally, a strong move higher on big volume and a quick throwback signal a short squeeze. Profit-taking in the $0.23-$0.25 supply zone also amplified the volatility.

The OBV was nearing the mid-August lows again, signaling heavy sell pressure during the latest rejection. Momentum on the 4-hour timeframe was also turning bearish and could lead to a deep retracement toward $0.19.

The bulls will want to see buying pressure ramp up as ADA approaches the $0.19-$0.20 demand zone.

Flat trading volumes and muted aggressive buying would mean there’s a chance of choppy, sideways price action for a few days around $0.20 as bulls and bears fight for control of the market.

• Cardano saw a sharp move higher up to $0.25 but was unable to make the full rally stick.
• A short-term retracement phase could send prices below $0.20 in the coming days.