Will Cardano's $0.198 Support Collapse... Warning of Further ADA Decline?

▲ Cardano (ADA)/AI generated image ©

Cardano (ADA) fell more than 6% this week, closely approaching its key support level of $0.198. Warnings are emerging that if $0.198 cannot be maintained, the correction could deepen further, exacerbated by bearish signals and overheating signs in the derivatives market, along with slowing technical momentum.

According to investment media outlet FXStreet on September 11 (local time), Cardano traded around $0.206 on Friday, showing a slight recovery, but it still dropped over 6% on a weekly basis. The current price is just above the critical support zone formed by the 50-day Exponential Moving Average (EMA) at $0.198 and the 100-day EMA at $0.200. Analysis suggests that if the daily candle closes below $0.198, the risk of further decline could increase.

Derivatives indicators also leaned bearish. According to Coinglass, ADA's long/short ratio on Friday was 0.91, near its lowest level in a month. A long/short ratio below 1 indicates that investor sentiment betting on price declines is dominant. The funding rate also turned negative at -0.0007%, resulting in short position holders paying fees to long position holders.

Warning signs were also detected in on-chain indicators. According to CryptoQuant summary data, large whale orders were observed in the ADA futures market, and both spot and futures markets showed signs of overheating. While other indicators largely remained at neutral levels, overall, a cautious and bearish sentiment among Cardano investors was prominent.

Technically, the defense of the $0.198-$0.200 range is expected to determine the short-term direction. ADA is moving above the 50-day EMA at $0.198 and the 100-day EMA at $0.200, partially cushioning immediate downward pressure, but the 200-day EMA at $0.241 is limiting the upside. The Relative Strength Index (RSI) is around 50, indicating neutral momentum, and the Moving Average Convergence Divergence (MACD) remains slightly negative below the zero line, suggesting no clear upward pressure.

In case of an upward movement, the 50% Fibonacci retracement level of $0.213 will be the first resistance, followed by the 61.8% retracement levels of $0.231 and $0.236, the 200-day EMA at $0.241, and $0.245 as successive resistance zones. Conversely, if the 100-day EMA at $0.200 and the 50-day EMA at $0.198 break down, the 38.2% Fibonacci retracement level of $0.195 will become the next line of defense, and further declines could open the downside to $0.173 and $0.150.

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