Cardano Tumbles 20% Following Trump-Fueled Weekend Surge

Cardano (ADA) experienced a notable 60% increase following the announcement of its inclusion in the US crypto reserve, with prices exceeding $1.10. This remarkable rally indicated strong bullish momentum, corroborated by technical indicators such as BBTrend and DMI.

However, the initial excitement has started to wane as ADA's price has corrected below $1, and technical signals now point to mounting selling pressure. The next steps for ADA will depend on its ability to hold key support and resistance levels, which will be crucial in determining its short-term price direction.

Cardano's surge after joining the US crypto reserve incited a notable change in its BBTrend indicator, which swung from -14.5 to 7.1, indicating a shift in market momentum. The BBTrend, linked to Bollinger Bands, helps traders assess the strength and direction of price trends. A move above zero suggests a bullish market, while a shift back below points to bearish tendencies.

Recently, ADA's BBTrend has dropped back to -13.4, signaling diminished bullish enthusiasm. This decline suggests increased selling pressure, which could result in further price declines unless renewed buying interest emerges. If ADA cannot maintain critical support levels, its price may continue to slide, although a BBTrend move toward neutrality could suggest stabilization.

Despite ADA's corrections, its Directional Movement Index (DMI) shows a marked increase in trend strength. The Average Directional Index (ADX), part of the DMI, rose from 28.3 to 43.7 post-announcement, indicating a robust trend. Though the ADX does not specify trend direction, it highlights trend intensity, suggesting a movement with potential continuity.

Concurrently, ADA's +DI (positive directional index) receded from 66.5 to 41, illustrating a cooling bullish momentum, while the -DI (negative directional index) climbed from 4.7 to 14.1, indicating seller retaliation. The interplay of a high ADX with a declining +DI and an increasing -DI hints that the trend remains potent, but selling pressure is on the rise. Continuation of this pattern could prompt a more profound retracement unless buyer strength resurfaces.

Following its inclusion in the US crypto reserve, Cardano soared over 60%, surpassing the $1.10 mark. However, subsequent corrections have brought ADA back to around $1 as initial enthusiasm subsides. Technical indicators like DMI and BBTrend imply diminishing uptrend vigor, raising concerns of further retracements.

If ADA fails to stabilize amidst growing selling pressure, it might test the $0.90 support level. Breaching this could lead to further declines to $0.81 and $0.65, potentially pushing prices as low as $0.50 in a strong downtrend. Conversely, if ADA regains bullish momentum, it could challenge the $1.16 resistance level and, upon surpassing it, rise to $1.32, its highest point since December 2024.

Cardano's near-term direction hinges on market reactions to recent price movements and whether new buying interest can counteract emerging selling forces.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.