Cardano price risks erasing 40% of ‘Trump Trade’ gains by December

Cardano’s price has surged by 140% so far in November, primarily due to Donald Trump’s reelection as the United States president.

Still, some metrics suggest that a considerable portion of the Trump-inspired Cardano gains may diminish in the coming days.

ADA signals 35% correction on weaker technicals

ADA’s price is showing signs of potential downside risk as a bearish “rising wedge” pattern forms on its four-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 November-December.

Interestingly, the $0.513 level, down about 35% from the current price levels, aligns with the 200-4H exponential moving average (200-4H EMA, the blue wave).

Volume has been declining during ADA’s recent upward move, which is another warning sign of a weakening rally. Bearish patterns, like the rising wedge, are more reliable when coupled with decreasing trading volumes.

Cardano’s chart also shows a growing deviation between rising prices and a falling relative strength index (RSI), indicating bearish divergence, which signals 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 would open the door to testing the $0.90 resistance level, which aligns with the 0.236 Fibonacci retracement trendline on ADA’s weekly chart.

From a fractal analysis perspective, $0.90 has served as 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 potentially 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.

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.