The price of Cardano this month has mostly been in a narrow range, increasing by about 0.5% in the past 24 hours, decreasing by approximately 1.6% throughout this week, and continues to struggle against a potentially more severe downturn.
From the graph, a clear downtrend can be seen, but the behavior on the blockchain and capital flows have not fully supported the correction. This tension is what currently determines the price of ADA.
The head and shoulders pattern creates risk.
On the daily chart, Cardano is approaching the confirmation of the head-and-shoulders pattern, with the neckline connecting the price lows sloping down, indicating that buyers are accepting lower prices just to defend the price at each instance.
A downward-sloping neckline generally reinforces the downtrend, as it indicates weakening demand before a clear bearish confirmation occurs. If the price closes significantly below that neckline, it will confirm the pattern and lead to a correction of about 18%, targeting around 0.24 USD, which poses a risk of breakdown that should be watched.
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At this time, ADA has not fully entered the downtrend pattern, as the price continues to move sideways, still allowing for attempts to negate this pattern.
One indicator has dropped nearly 60%, reflecting that selling pressure is starting to cool down.
Key indices on the blockchain still contradict the breakdown trend, as the spent coins age band, which measures token movement and selling trends, has rapidly decreased from around 241.71 million ADA on December 11 to about 105.51 million ADA now, nearing a reduction in movement volume of over 60%.
The number of spent coins decreasing typically reflects that holders are rushing to sell less. The last time this index dropped, it signaled a short-term rebound. For example, on November 29, after spent coins decreased, ADA bounced back by around 2.6%. Another prominent example occurred on December 5, after activity hit a low, and the price surged from 0.41 USD to 0.47 USD by December 9, an increase of about 15%.
The current drop does not guarantee a similar reaction will occur again, but reflects an environment that has previously supported recovery.
Large capital and the price levels of Cardano determine the next direction.
The latest key factor remains evident in the Chaikin Money Flow (CMF) chart, which measures the inflow and outflow of capital. It shows that the trend continues to decline, even as the price of Cardano rises between December 18 and December 23. This is therefore considered a bearish signal going against the trend, as capital circulation weakens while attempting to recover.
However, currently, CMF is pressuring the upper resistance of the downtrend line, and if CMF can break above, while the price remains stable above 0.35 USD, it could weaken the head-and-shoulders pattern (which is the escape route from correction). If ADA breaks through to 0.38 USD, it would equate to an increase of 6.5% and reflect that buyers are pushing the price up. However, just having CMF break that trend may not be sufficient.
Because it might be necessary for that indicator to break above the zero line to show overall accumulated inflow of capital.
Above that line, 0.48 USD is the point where the correction hypothesis begins to diverge, and reaching that level is not a prediction but a point where the downtrend pattern loses its meaning.
If ADA closes below 0.29 USD, it will become a case where the base for the downward adjustment is confirmed, and 0.24 USD will be the next support. However, Cardano is currently trying to counter the downtrend, even though coin activity has decreased and there is still a possibility that capital inflow may improve. If CMF breaks above resistance and the price maintains above 0.35 USD or at least 0.33 USD, there is still a chance to survive.
However, if unsuccessful, the price chart of Cardano has already shown us the destination.
