Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice
Since hitting its ATH, Cardano (ADA) has fallen and has practically fallen below its 20-50 EMA. The drop proved worrisome for the bulls as they failed to defend the critical $0.94.
Assuming the bulls’ willingness to hold a foothold on the 13-month support near the $0.843 – $0.824 range, ADA should aim for a near-term rebound. While the price seemed skewed toward the ‘cheaper’ side of the Bollinger Bands, ADA positioned itself to test its 20 EMA (red) before making a slight pull back to its long-term support.
As of going to press, the altcoin was trading at $0.835.
Cardano daily chart
ADA formed a six-month bearish channel (reversal pattern, yellow) while the alt was in a steep downtrend. In addition, it has lost more than 72% of its value since the ATH and has formed two bearish flags in the past two months.
Consequently, on February 24, it fell to a 9-month low as buyers stepped in to defend the $0.82 level. Interestingly, this support level has stood as a test floor for almost 13 months. Over the past two days, the bearish flag breakdown continued to test this support level as the bulls rejected lower prices.
From here on, a test of the $0.82 level would be likely before ADA revives itself to test its seven-week trendline resistance (white, dashed). A close above the $0.9 level would be vital to open recovery gates to exit the steep downtrend in the near term. Should the bulls decline, a close below the lower trendline of the long-term down channel could cause a fallout.
The RSI favored the bears after it lost the 38 point level. Also, price action has been testing the $0.843 level for the past 12 days as the RSI witnessed higher declines. This reading reaffirmed a recovery opportunity from the immediate support range.
Also, the gap between the DMI lines seemed congested. This justified short-term bearish moves before the distance between the lines narrowed.
Given the confluence between the higher dips in the RSI and the overloaded position of its EMAs and DMI, a rally towards $0.9 seems likely in the coming days.
Additionally, traders/investors should keep a close eye on Bitcoin’s movement as ADA shares a 77% 30-day correlation with the king’s coin.
This post Cardano: Assessing the chances of ADA’s near-term price rally
was published first on https://ambcrypto.com/cardano-assessing-the-odds-of-adas-near-term-price-revival/