With Cardano [ADA] breaching $0.4565, bears could eye this level next

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Dis­claimer: The find­ings of the fol­low­ing analy­sis are the sole opin­ions of the writer and should not be con­sid­ered invest­ment advice.

Cardano’s [ADA] recent drop from the $0.63-level shaped into a down-chan­nel retrace­ment in the dai­ly time­frame. The 50 EMA (cyan) joined hands with the hor­i­zon­tal resis­tance to pro­pel this downfall.

The broad­er tra­jec­to­ry would like­ly favor the sell­ers in the com­ing days. Unless the buy­ers come to the res­cue at the imme­di­ate sup­port lev­el, ADA could see an extend­ed decline before a strong revival.

At press time, ADA trad­ed at $0.4522, up by near­ly 1.51% in the last 24 hours.

ADA Daily Chart

Source: Trad­ingView, ADA/USDT

As the price action fell below the 20 EMA, the imme­di­ate nar­ra­tive for the alt­coin took a bear­ish flip. The down-chan­nel has shunned the recent bull­ish efforts to reclaim crit­i­cal sup­port levels.

Fur­ther, the price action now entered a tight phase as the gap between the low­er and upper bands of Bollinger Bands (BB) decreas­es. After an extend­ed squeeze, the alt would like­ly wit­ness a high volatil­i­ty phase in the com­ing days.

With the price action breach­ing the long-term $0.4565-support, the bears could eye for a close below the $0.43-level. In this case, poten­tial tar­gets would rest in the $0.401-zone. A sud­den buy­ing resur­gence above the Point of Con­trol (POC, red) could dis­re­gard the bear­ish ten­den­cies. Here, the buy­ers’ efforts could be short-lived by the 50 EMA by the sellers. 

Rationale

Source: Trad­ingView, ADA/USDT

The Rel­a­tive Strength Index (RSI) took a rel­a­tive­ly bear­ish stance while retest­ing the 39-mark sup­port. A breach below this sup­port could aid the sell­ers in find­ing fresh­er lows.

Fur­ther, the Chaikin Mon­ey Flow (CMF) saw a close above the zero-mark and affirmed ease in the sell­ing vig­or. How­ev­er, the price action marked low­er peaks dur­ing this time. So, any rever­sals on the CMF could con­firm a bear­ish divergence.

Also, the Direc­tion­al Move­ment Index (DMI) exhib­it­ed a bear­ish stance. But the ADX of ADA revealed a sub­stan­tial­ly weak direc­tion­al trend.

Conclusion

With sell­ers find­ing a break below the $0.45-level and the indi­ca­tors tak­ing a bear­ish tilt, ADA could see fur­ther down­side risk. The tar­gets would remain the same as above.

Nonethe­less, traders/investors should keep a close watch on Bitcoin’s move­ment and its effects on the wider mar­ket to make a prof­itable move.

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