ADA Rebounds 4%, Faces Retest Amid Bearish Sentiment

Cardano (ADA) has recently experienced a notable recovery, gaining nearly 4% in price. However, the asset's trajectory now appears to be heading towards a retest of the ascending trendline support. This decline can be attributed to the prevailing bearish market sentiment and the recent security breach at Bybit.

The current momentum of ADA suggests that the price is nearing a critical support level. If the market does not witness a significant sell-off, the price may stabilize. However, if selling pressure intensifies, the market is likely to continue its downward trend until sentiment shifts.

Technical analysis indicates that ADA maintains its upside potential as long as it trades above the ascending trendline or the $0.73 mark. Looking at the daily and four-hour time frames, ADA seems to be forming a bullish cup-and-handle pattern, along with an ascending triangle pattern, which reinforces its bullish outlook.

Based on recent price action, ADA could potentially reach the $0.85 level once it surpasses the $0.78 mark. However, given the current market sentiment, if ADA falls and closes a four-hour candle below the $0.74 level, we may witness a substantial sell-off, leading to a 10% price drop and bringing it down to the $0.65 level.

As of now, ADA is trading below the 200 Exponential Moving Average (EMA) on the four-hour time frame, indicating that it is still in a downtrend. Meanwhile, its Average Directional Index (ADX) stands at 12, suggesting weak trend strength, which could be a key factor contributing to ADA's inability to rally.

Examining the current market sentiment, intraday traders are over-leveraged at the $0.76 level on the long side, with $2.23 million worth of long positions. Additionally, the $0.785 level is another over-leveraged zone where traders betting on the short side have built $2 million worth of short positions. These over-leveraged positions suggest that bulls are dominating, which could help ADA's price stay above the crucial trendline.

At the time of writing, ADA is trading near $0.77 and has experienced a modest 0.50% price surge in the past