Cardano (ADA) Primed to Correct After 30% Surge

Over recent days, Cardano (ADA) went through a firm surge to the upside. Since it bottomed just two days ago, the coin is up around 30 percent.

However, there are technical signs which seem to suggest that the cryptocurrency is primed to reverse lower after the rally. This is connected to the fact that some analysts are expecting Bitcoin’s ongoing recovery to taper off as it encounters resistance in the $10,800-11,200 regions.

Cardano Rejects at Pivotal Resistance After 30% Surge: The ADA Bear Case

Bitcoin’s strong recovery was the reason why it took an surge. Moreover, analysts are now expecting Cardano to correct to the downside.

On September 25th, an analyst put forth an ADA chart.

surge

The chart suggests that a textbook bearish divergence between Cardano’s trend and a crucial trend indicator was formed because of its recent price action. This divergence means there was a loss of momentum in the uptrend. As a result, the chance of reversing lower has increased. Moreover, Cardano is now hovering the upper band of a range indicator. This means on a short-term time frame, the sales may be excessive.

Another trader shared the same sentiment that Cardano could be achieving a top in the near term. According to this trader, as ADA fails to retake the highs at $0.098 per coin, it has entered a short-term downtrend.

Shift Towards DeFi Could Help Cardano

This shift of Cardano towards decentralized finance could do good on ADA. Considering how DeFi helped ETH over recent months, this could also happen to Cardano.

In August, the founder of the blockchain, Charles Hoskinson, said that he has a lot of interest on DeFi. ADA could start gaining more traction if Cardano developers will be able to capture some of the DeFi market shares as Ethereum encounters high transaction fees.

ADA will be moving positively if DeFi takes off smoothly on Cardano.

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