Will ADA dip lower as bulls fail to take out a key resistance

Bitcoin, Ether, and XRP are all in the green as the broader cryptocurrency market continues its positive start to the week.

Cardano’s ADA reclaimed its position as the 10th largest cryptocurrency by market cap two weeks ago and continues to solidify this position. 

ADA is up by 2.7% in the last 24 hours but has dropped below $0.28 amid declining retail interest. 

The derivatives metrics paint a bearish picture, with ADA’s Open Interest (OI) continuing to fall.

Furthermore, short bets are rising among traders, suggesting a bearish bias. 

Cardano’s derivatives data remain bearish despite the recent rally

ADA is up by nearly 3% in the last 24 hours, but failed to take out the $0.2885 resistance level.

It has now dropped below $0.28 and could experience a further dip in the near term as retail traders take on short positions.

According to CoinGlass, ADA’s futures Open Interest (OI) has declined to $456 million on Thursday.

The OI  has been continuously falling since mid-January, reflecting waning investor participation and projecting a bearish outlook.

Furthermore, ADA’s long-to-short ratio reads 0.79, close to its lowest level in over a month.

The ratio declining below 1 reflects bearish sentiment in the markets, as more traders are betting on ADA’s price to fall.

ADA could retest the daily low as bears regain strength

ADA remains bearish on the 4-hour chart despite the rally recorded so far this week.

At press time, ADA is trading at $0.27, with its near-term bias now neutral.

The price is likely to test the recent daily low of $0.2572 after the bulls failed to take out the $0.2885 resistance level on Wednesday. 

ADA is trading below the 50 and 100-day Exponential Moving Averages (EMAs) clustered above $0.30, underscoring a broader bearish context in the medium term.

The Relative Strength Index (RSI) on the 4-hour chart reads 48, below the 50 midline, indicating a fading bullish momentum. 

The Moving Average Convergence Divergence (MACD) indicator has dropped into the negative territory, reinforcing a bearish reversal move. 

If the bulls regain control and the daily candle closes above the $0.2885 resistance, ADA could push past the horizontal barrier near $0.32 that coincides with the descending EMAs and defines the upper boundary of any rebound.

Closing above the $0.32 resistance will eliminate the prevailing bearish structure and open the way to a more sustainable recovery phase. 

However, if the recovery fails and ADA revisits the daily low of $0.2572, it could dip lower towards the horizontal support at $0.24, where prior buying interest emerged.

An extended bearish movement would expose ADA to renewed selling pressure, with the February 6 low of $0.22 a likely target.