Disclaimer: The findings of the following analysis are the sole opinions of the author and should not be taken as investment advice.
There have been some worrying signs in the Cardano market lately. Bearish patterns in both the ADA price and its indicators, coupled with a market sell-off, led to severe losses. Strong waves of selling pressure were evident in the market as ADA posted its biggest daily percentage loss since June 21, with a single candle even falling as low as $ 2.00.
Various support levels were now under pressure to control the selling pressure and if buyers are not careful, ADA would suffer another 22% drop in value.
At the time of this writing, ADA was trading at $ 2.39 with a market capitalization of $ 79.89 billion.
Cardano daily chart
Cardano’s slide was within Expectations after a rising wedge appeared on its daily and 12-hour charts. A breakout resulted in a large red candle with an even larger candle falling as low as $ 2.00 and towards the 50-SMA (yellow).
Although today’s session opened at $ 2.51, the candle had broken the defensive region of $ 2.46 and was looking to extend losses. For a bullish revival, the support area present at $ 2.26 would be key to the success of ADA. In fact, the 4 hour time frame (not shown) indicated that buying pressure has been slowly creeping into the level mentioned above.
However, this does not necessarily mean that ADA would retest $ 3 anytime soon. There are reactionary buying possibilities for the next 24 hours, but sellers are expected to keep prices in check. Moving forward, the range between $ 2.20 and $ 2.56 could become prominent as the ADA stabilizes.
On the other hand, a close below $ 1.80 would break ADA’s long-term bullish outlook.
The daily RSI broke south from a bearish descending triangle and sloped below its equilibrium. The midline has often functioned as support / resistance and it is early to call for a prolonged decline.
The Awesome Oscillator posted a fourteenth consecutive red candle as buying pressure has been on a steady decline since late August. This resulted in a bearish cross on the MACD, the first since July 11.
Considering the fact that both the Awesome Oscillator and the MACD were trading at lush levels, the current stabilization can be considered healthy in the long term.
As ADA looks to cut losses above the $ 2 mark, the price could stabilize between $ 2.20 and $ 2.58 in the coming days. Reactive buying could push the price back to $ 3, but this move is expected to be short-lived as the ADA indicators reset before the next swing.
However, traders should be wary of a close below $ 1.88, as this would put the market under severe risk of another strong sell-off.
This is a machine translation of our English version.