Cardano, 'Golden Cross' Appears in Downtrend... Bull Trap or Buying Opportunity?

▲ Cardano (ADA)/ChatGPT generated image

Cardano (ADA) has formed a golden cross, a strong bullish signal, on its short-term chart. However, coinciding with an overall market downturn, it faces a crucial test of whether the trend will reverse.

According to a report by cryptocurrency media outlet U.Today on April 20 (local time), Cardano completed a golden cross on its 3-hour chart. This phenomenon, where the 50-day moving average crosses above the 200-day moving average, was observed for the first time in April. However, this signal coincides with a general decline in the virtual asset market, raising doubts among investors. Over the past 24 hours, futures positions worth approximately $254 million were forcibly liquidated across the entire market. The liquidation of long positions, which anticipated price increases, amounted to $180 million alone, putting pressure on the market.

Cardano's price continued its two-day decline over the weekend, trading at around $0.2496 as of April 20. This is a 1.04% decrease compared to the previous day. It has recovered approximately 4.80% from its low of $0.236 recorded on April 13. However, investor sentiment in the derivatives market remains defensive. Funding rates for perpetual futures contracts remain negative for most assets, suggesting that leveraged investors are still betting on further declines.

Currently, Cardano continues to struggle, fluctuating within a narrow trading range. The price is moving between the 50-day moving average on the daily chart at $0.257 and the support level at $0.23. Throughout April, there have been several attempts to break above the 50-day moving average, but all have failed. On April 17, it rose to $0.264, raising hopes for a breakout, but soon retreated. Breaking out of the large trading range between $0.22 and $0.3, which has been formed since early February, is an urgent priority.

For a full trend reversal, two key price levels must be overcome. Buying pressure needs to stabilize the price above the 50-day moving average and then break through the $0.3 resistance level. If this scenario materializes, the price could see a resilient rise to around $0.36. The Relative Strength Index (RSI) is currently hovering at a neutral level of 50, indicating that a sideways trend without clear direction may continue for a while. The breakdown of the lower support level at $0.22 is also a variable that needs to be monitored in real-time.

Whether the golden cross predicted by technical indicators will be a setup for a powerful rally or a temporary rebound (bull trap) depends on this week's price movement. The recovery of overall market liquidity is likely to determine Cardano's independent trajectory. Investors are maintaining a cautious approach, confirming whether short-term resistance levels are broken. As volatility in the virtual asset market expands, global investors are focused on whether Cardano can break through the upper boundary of its trading range.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*