Cardano (ADA) price has surged by 140% so far in November, primarily due to Donald Trump’s reelection as the United States president.
However, some metrics suggest that a considerable portion of the Trump-inspired ADA gains may diminish in the coming days.
ADA signals 35% correction on weaker technicals
Cardano's ADA price is showing signs of potential downside risk as a bearish "rising wedge" pattern forms on its 4-hour chart.
The technical structure, defined by converging trendlines sloping upward, often signals a potential trend reversal to the downside.
If ADA breaks below the wedge’s lower trendline, the breakdown could be as deep as the height of the wedge’s widest part.
This projects a potential price target near $0.598 in the short term and $0.513 in a more extreme bearish scenario for the November-December period.
ADA/USD four-hour price chart. Source: TradingView
Interestingly, the $0.513 level, down approximately 35% from the current price levels, align with the 200-4H exponential moving average (200-4H EMA; the blue wave).
Volume has been declining during ADA's upward move lately, which is another warning sign of a weakening rally. Bearish patterns, like the rising wedge, are more reliable when coupled with decreasing trading volumes.
Furthermore, Cardano’s chart shows a growing deviation between rising prices and falling relative strength index (RSI), indicating bearish divergence, which further signals a weakening upside momentum.
The RSI sits at 68, close to the overbought territory of 70, further suggesting that ADA is nearing an overextended phase, which may result in a price correction.
Cardano’s weekly chart supports sell-off scenario
A decisive breakout above the wedge’s upper trendline, especially with higher volume, could invalidate the bearish outlook.
Such a move may open the door to testing the $0.90 resistance level, which aligns with the 0.236 Fibonacci retracement trendline on ADA’s weekly chart.
ADA/USD weekly price chart. Source: TradingView
From a fractal analysis perspective, $0.90 has served a strong distribution level since April 2022.
For instance, ADA dropped 65-75% after testing it as resistance in March 2024 and April 2022, which also puts a similar correction during the November-December period in play.
Should it happen, Cardano’s next downside target on weekly chart appears to be its resistance-turned-support descending trendline, which aligns with its 200-week EMA (the blue wave) at around $0.476. That is down around 40% from current price levels.
ADA’s weekly RSI, which is now seven points above the overbought threshold of 70, supports the long-term correction scenario.
Related: Charles Hoskinson shares new plans to ‘help foster' US crypto policies
On the brighter side, Cardano’s fundamentals have improved due to Trump’s reelection.
His administration has promised to avoid heavy-handed crypto regulation, which may boost demand for cryptocurrencies like ADA in 2025.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.