Cardano (ADA) price is down 46% from its yearly high and is currently facing a make-or-break price level for a bullish reversal. Here’s what you need to know:
Cardano Price Analysis: Daily Chart
The daily ADA/USD chart is currently charting a path within a descending channel, which has defined the bearish trend since early March. On Monday, ADA price peaked near $0.475, creating significant resistance at the upper limit of the channel and of the critical 20-day Exponential Moving Average (EMA), which is currently at $0.47.
In the short term, this resistance level is crucial as it coincides with historical price rejection points, confirming its importance. At the time of writing, ADA is trading at around $0.44.
The convergence of the 20-day EMA ($0.47), the 50-day EMA ($0.54), and the 100-day EMA ($0.51) above the current price level illustrates a dense zone of resistance. The 200-day EMA at $0.52 reinforces this barrier and highlights strong bearish momentum.
The Relative Strength Index (RSI) on the daily chart currently stands at 38, which is not in oversold territory (below 30), but indicates bearish momentum with potential for further decline unless a reversal occurs.
For a bullish reversal, ADA needs a sustained break above $0.47 (20-day EMA) with associated high volume to confirm the breakout from the descending channel and change market sentiment. Then the cluster of EMAs becomes the central resistance zone.
Crossing this band is paramount to build bullish momentum for a break above March’s yearly high of $0.81. If not, ADA price could move toward the channel centerline and fall below $0.40.
In-depth weekly chart review
Moving to the weekly chart, the broader picture also underlines the bearish sentiment that has dominated ADA since it peaked at $3.17 in late 2021. The series of lower highs and lower lows is a textbook example of a downtrend.
Price action currently remains suppressed below the long-term moving averages: the 20-week EMA at $0.52, the 50-week EMA at $0.48, the 100-week EMA at $0.51, and the 200-week EMA at $0.52, all of which slope downwards. underscoring the continued selling pressure of recent weeks.
The Fibonacci retracement levels, drawn from the high of $3.17 to the low of $0.22, provide further insights. Currently, ADA is trading near USD 0.44, which is above the key psychological and technical support at USD 0.40.
The nearest significant Fibonacci retracement level is the 0.236 level at $0.918, which ADA has struggled to surpass. A break above this level could open the way to higher Fibonacci levels at $1,348 (0.382) and $1,697 (0.5), which would require a significant shift in momentum and buying interest.
Overall, attention should be focused on daily resistance at around $0.47 (descending channel breakout) if ADA is to move beyond its bearish restrictions. Overcoming this barrier would be critical to confirming a bullish reversal. Until this level is definitively breached with substantial volume, the outlook continues to lean toward a bearish continuation.
Featured image of Bitget, chart from TradingView.com
Disclaimer: The article is for educational purposes only. It does not represent NewsBTC’s views on buying, selling or holding investments and of course investing involves risks. You are advised to conduct your own research before making any investment decisions. Use the information on this website entirely at your own risk.