2022-12-19 13:30 |
The Cardano (ADA) price decreased considerably during the week of Dec. 11-18 despite there being no negative news. Besides the bearish price action, the decrease invalidated a bullish divergence in the RSI, which was the only potential bullish sign in place.
ADA is the native cryptocurrency of the Cardano platform. It uses the proof-of-stake (POS) consensus mechanism and mainly deals with smart contracts and decentralized applications. The creator of Cardano, Charles Hoskinson, was recently in the spotlight with comments he made about the XRP community.
He said that he will no longer answer any XRP or Ripple-related questions due to what he believes are ”vicious attacks” against him. Besides this, there was no other important Cardano news that could relate to the cryptocurrency market.
Cardano Price Breaks Down Below Crucial SupportThe Cardano price decreased underneath a descending resistance line since reaching an all-time high of $3.101 in Aug. 2021. The downward movement led to a low of $0.255 in Dec. 2022. Additionally, it caused a breakdown from the $0.350 horizontal support area. The area is now expected to provide resistance.
The ADA price breakdown was crucial since the next closest support area is now at $0.150. This is a further 40% drop from the current price.
Moreover, the breakdown also invalidated a potential bullish divergence in the weekly RSI (green line). Since the price action is bearish, this was the only bullish sign left that could initiate a reversal.
As a result, the most likely Cardano price forecast is a drop toward the $0.150 support area. Breaking out from the descending resistance line and reclaiming the $0.350 area would indicate that the trend is bullish instead.
ADA/USDT Weekly Chart. Source: TradingView ADA Price Bottom Nowhere in SightThe technical analysis from the daily time frame reiterates the findings from the weekly one. On Dec. 16 (red icon), the ADA price broke down from a descending support line and the $0.286 support level. The 1.61 external Fib retracement of the previous bounce creates this support level. It is the final support level before $0.150. As a result, its loss is a detrimental development that could accelerate the rate of decrease.
An exciting development is that the Cardano price breakdown caused the daily RSI to drop to 25, deep into oversold territory. It is worth mentioning that such low RSI values have previously been associated with bottoms (green circles). But, as outlined previously, there are no other bullish reversal signs. Therefore, the RSI will likely not be sufficient to initiate a reversal.
Reclaiming the support line and the $0.286 support area could invalidate this bearish forecast.
ADA/USDT Daily Chart. Source: TradingViewTo conclude, the Cardano price forecast is bearish due to the bearish price action and technical indicator readings. As a result, the most likely scenario is the continuation of the downward movement. On the other hand, reclaiming the $0.285 support area is the first step in a potential bullish reversal.
However, reclaiming the $0.350 area would be required to confirm the bullish reversal. Since there are no bullish signs, positive Cardano news are likely required to catalyze this potential reversal.
For BeInCrypto’s latest crypto market analysis, click here.
The post This Cardano (ADA) Bearish Signal Could Lead to 40% Drop appeared first on BeInCrypto.
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