ADA Technical Analysis: On-Chain Data Revealing 'Buy Sentiment Reversal Signal' and Practical Supply and Demand

Cardano(ADA) is showing a subtle sideways consolidation, but the latest on-chain data suggests a positive shift in market sentiment. Currently trading around $0.42, ADA experienced about a 16% correction after failing to break the upper resistance last week. However, as the price stabilized near $0.40 on Monday, it is interpreted as a reorganization phase. Notably, signals such as large trader buy-ins, a shift in derivatives funding rates, and an increase in long positions are being observed simultaneously, leading to the analysis that this is a “recharging phase for the next rally.”

On-chain data indicating the movements of large players

Looking at CryptoQuant data, whale-level large buy orders are increasing in both the spot and futures markets of Cardano, while a cooling-off phase is forming as overheat signals ease. This indicates that new demand is flowing into the market even in price-lowered zones.

Signals from the derivatives market are even clearer. According to CoinGlass data, ADA’s long-short ratio has risen to 1.19, reaching its highest level in over a month. A ratio above 1 means long positions significantly outnumber short positions, showing that market participants are placing more weight on bullish scenarios.

An even more intriguing signal is the shift in funding rates. The OI-weighted funding rate turned positive from negative starting Saturday and is currently at 0.0020 as of Monday. This means longs are paying shorts, and technically, it indicates an increase in traders positioning themselves for potential upside rather than further downside. Historically, after such funding rate shifts, ADA has experienced sharp rallies, making the alignment of spot market and derivatives sentiment a noteworthy signal.

Technical pattern: Breakout of the falling wedge top signals, target at $0.51

The falling wedge pattern formed since mid-October is a key structure explaining ADA’s current price zone. This pattern, created by two converging descending trendlines connecting multiple highs and lows, generally signals a strong trend reversal upon a breakout above the top trendline.

Last Wednesday, ADA faced resistance at the top of this wedge and pulled back, and as of Monday, it is consolidating near $0.40. The first hurdle for an upward scenario is a clear breakout above this wedge’s top trendline.

If the breakout succeeds, the next resistance level is around $0.51. This level aligns with the 38.2% Fibonacci retracement of the recent high from April lows, making it a technically meaningful target.

Momentum indicators are also gradually improving. The daily RSI is below the neutral 50 at around 40 but maintains an upward slope, indicating easing downward pressure. For a full-fledged bullish move, RSI needs to rise above 50 to confirm that buying momentum is gaining dominance.

Downside defense lines traders should not overlook

All bullish scenarios come with risk management considerations. If ADA undergoes further correction from current levels, the next key support is the December 1 low of $0.37. This level is considered the bottom of the previous correction and a psychological support zone.

If $0.37 breaks down, the market may need to consider deeper retracement scenarios beyond a simple short-term correction. Therefore, traders building long positions from a bullish perspective should set a stop-loss or risk management threshold near $0.37 as a practical defensive measure.

Conclusion: Confirming the alignment of on-chain data and technical signals

Cardano currently shows multiple positive signals from on-chain data, including whale buy-ins, funding rate shifts, and increased long positions. Technically, the breakout of the falling wedge top appears imminent. However, reaching the $0.51 target requires a clear breakout above the $0.40 resistance and confirmation that RSI rises above 50. During this process, $0.37 remains a critical support zone that investors should monitor closely.