- Cardano’s price hovers around its key support at $0.72 on Tuesday; a close below could trigger a correction.
- On-chain metrics support a bearish thesis as ADA’s daily active addresses and DEX trading volume are falling.
- The technical outlook suggests weakening momentum and a double-digit decline ahead.
Cardano (ADA) is trading in the red on Tuesday at the time of writing, hovering around its key support level at $0.72. A decisive close below this level could trigger a correction. ADA’s falling daily active addresses and decentralized exchange (DEX) trading volume further support the bearish outlook. Additionally, the technical outlook suggests weakening momentum and a double-digit decline.
Cardano’s On-Chain Metrics Show a Bearish Bias
The Daily Active Addresses index, which tracks network activity over time, paints a bearish picture for Cardano. An increase in the metric signals increased blockchain usage, while declining addresses point to lower demand for the network.
In the case of ADA, Daily Active Addresses fell to 23,644 on Tuesday from 35,696 on May 14, extending a downtrend that began in early March. This indicates that demand for the use of the ADA blockchain is decreasing, which is not a good sign for Cardano’s price.
Data from crypto intelligence tracker DefiLlama shows that Cardano’s on-chain DEX trading volume has fallen steadily since early December and currently stands at $3.06 million on Tuesday. This drop in volume signals a decrease in user activity and liquidity on the ADA blockchain, indicating a bearish outlook.
Cardano Price Forecast: Momentum Indicators Show Bearish Signals
Cardano’s price faced rejection around the daily resistance at $0.84 on May 13 and fell 10% in the following four days. This daily level coincides with the 50% Fibonacci retracement (drawn from the March 3 high of $1.17 to the April 7 low of $0.51) at $0.84, making it a key resistance zone. However, ADA retested and found support around its 200-day exponential moving average (EMA) at $0.71 on Sunday. At the time of writing on Tuesday, it is trading slightly lower around $0.73.
If ADA breaks and closes below the 200-day EMA at $0.71 on a daily basis, it could extend the decline by 12% from its current levels to retest its May 6 low of $0.64.
The Relative Strength Index (RSI) on the daily chart marks 49, slipping below the neutral level of 50, indicating an increase in bearish momentum. The Moving Average Convergence/Divergence (MACD) indicator also supports the bearish thesis as it showed a bearish crossover on Sunday, giving a sell signal and indicating a downtrend.
However, if Cardano finds support around the 200-day EMA at $0.71 and recovers, it could extend the recovery to retest its daily resistance at $0.84.
