Lucía Peña
Cardano (ADA) extended its gains on Friday, September 12, climbing to $0.90, its highest level in two weeks and nearly 80% above June’s lows. The move aligns with the broader crypto market rebound, but technical signals suggest that this rally could be nearing exhaustion.
On the daily chart, ADA is approaching the key resistance level at $1. However, price action is forming a bearish rising wedge, a pattern that often precedes steep corrections.
The wedge’s upper boundary connects highs from March, while the lower trendline links swing lows since June. With both lines nearing convergence, analysts warn of a potential sharp breakdown in the near term.
Technical Indicators Turn Bearish
Momentum gauges further support the bearish scenario.
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The Average Directional Index (ADX) has dropped to 16, its lowest since May 8 and far below July’s peak at 47.
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The Percentage Price Oscillator (PPO) and the Relative Strength Index (RSI) are both trending downward.
If momentum continues to fade, ADA could decline toward the $0.51 support zone, about 45% below current levels.
Still, this outlook would be invalidated if Cardano breaks above $1.20, which would signal renewed bullish strength.
DeFi Weakness Weighs on Cardano
There are three main reasons why Cardano may face a bearish breakout soon:
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Falling DeFi activity – Cardano’s total value locked (TVL) has dropped 45% in recent months, plunging from $720 million in December to just $383 million today.
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Federal Reserve policy risks – The anticipated Fed rate cuts could become a “sell-the-news” event, with traders exiting after the announcement.
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Ecosystem lagging competitors – Cardano holds only $40 million in stablecoins, a small figure compared to the $287 billion industry-wide stablecoin market.
Outlook: Can ADA Defy the Odds?
While Cardano’s price has shown resilience, the combination of bearish chart patterns, declining on-chain activity, and macro risks makes a short-term correction likely.
Unless ADA clears the $1.20 resistance, traders may see a retracement back toward June’s support levels.
