Cardano/Yen (ADAJPY) Market Overview

• Cardano/Yen (ADAJPY) closed 24 hours at 100.96, down from an open of 103.3 with a high of 104.7 and low of 99.54.
• A strong bearish reversal emerged after a 4.1% drop from the session high, marked by a large engulfing candle on the 15-minute chart.
• Volatility expanded as the 15-minute Bollinger Bands widened, suggesting increased uncertainty and possible trend exhaustion.
• RSI dipped below 30 early in the session but failed to hold above it, indicating ongoing bearish pressure and potential oversold conditions.
• Volume spiked during the sell-off, confirming price weakness, but turnover diverged later as the trend stalled, hinting at waning conviction.

Cardano/Yen (ADAJPY) opened at 103.3 on October 28 at 12:00 ET-1 and closed at 100.96 at the same time the following day. The pair reached a high of 104.7 and a low of 99.54 within the 24-hour window. Total volume traded during the period was 2,145,392.7 ADA, with a notional turnover of approximately ¥216,155,637.00. Price action reflected a sharp bearish reversal, particularly during the overnight hours, as sellers overwhelmed buyers.

Structure & Formations

Price formed a classic bearish engulfing pattern early in the overnight session as a large red candle fully consumed the preceding bullish candle. This pattern, combined with a key swing high at 104.7 and a pivot low at 99.54, established a short-term trading range. A potential support level emerged around ¥101.0–101.2, where price found multiple rejections throughout the session. On the 15-minute chart, a bearish flag pattern developed after the initial breakout from the high, signaling exhaustion in the bullish momentum.

Moving Averages

On the 15-minute chart, price closed below both the 20 and 50-period moving averages, indicating short-term bearish control. The 50-period line acted as a resistance-turned-support level at ¥102.3–102.4, but the pair failed to hold it. On the daily chart, the 50-period moving average sits at ¥102.8, with the 200-period line at ¥101.6, suggesting a neutral to bearish tilt for the medium term. Price remains below both 50 and 200-period lines, indicating a bearish bias.

MACD & RSI

The MACD line turned negative and crossed below the signal line, confirming bearish momentum. A bearish crossover occurred near ¥103.0, followed by a gradual divergence in the histogram, indicating weakening momentum in the short term. RSI dipped below 30 during the overnight sell-off, hinting at oversold conditions, but failed to rebound above 50, indicating a lack of follow-through buying pressure. This divergence between price and RSI suggests potential exhaustion in the bearish move.

Bollinger Bands

Bollinger Bands expanded during the sell-off, with the lower band falling to ¥99.0, and the upper band hitting ¥104.9. The price closed near the lower band, confirming a potential overextension in the bearish direction. The widening of the bands indicates rising volatility, which is typical during breakout or breakdown phases. A contraction in volatility may follow if the pair consolidates near current levels before attempting a direction.

Volume & Turnover

Volume spiked during the overnight sell-off, with large volumes recorded in the ¥103.5–104.0 range, confirming the bearish breakout. However, turnover declined during the morning hours despite continued bearish price action, indicating a possible loss of conviction among sellers. This divergence between volume and turnover could signal a potential reversal or consolidation phase in the near term. The highest volume-to-price ratio was observed in the ¥101.5–102.0 range, suggesting strong participation during the retracement.

Fibonacci Retracements

Applying Fibonacci retracements to the swing high at ¥104.7 and the swing low at ¥99.54, the 61.8% level is at ¥101.93, and the 38.2% level is at ¥102.49. Price appears to have found resistance at the 61.8% level during the morning and afternoon hours, and the 38.2% level acted as a key psychological pivot during the retracement. The 50% level at ¥102.12 was also a significant support zone. A break below ¥101.04 would extend the Fibonacci sequence into the 78.6% and 100% levels.

Backtest Hypothesis

To assess the predictive power of bearish candlestick patterns, we can integrate a backtesting strategy focusing on the bearish engulfing pattern observed in ADAJPY. A potential approach involves identifying bearish engulfing candles confirmed by a close below the midpoint of the prior candle. The strategy could then evaluate the performance of selling at the close of the engulfing candle, using a stop-loss at the high of the pattern, and a target based on a 3–5% risk-reward ratio. This method, applied to ADAJPY and similar pairs, could help quantify the probability and expectancy of such patterns, especially in conjunction with RSI and volume divergences.