On March 5, 2019 the price of Cardano (ADA) reached a low of nearly $0.40. It has been on a gradual uptrend since.
Here is a look at the prices from Mar 5 to Mar 14:
In our Mar 11 analysis of Cardano, we predicted that the price will keep trading inside a descending channel. While it did do so for three days, a breakout occurred on Mar 14 leading to subsequent price increases.
Based on our current analysis, the price of ADA is likely to face a slight reversal with initially slow price decreases. After a period of time, however, we believe these losses will accelerate. In short, a decisive downward move is likely forthcoming.
Key Highlights For March 15
- The price has been on an uptrend since Mar 5.
- It is trading inside an ascending wedge.
- It is trading right on the resistance line of the wedge.
- There is bearish divergence developing in the RSI.
- There are support areas near $0.048, $0.043 and $0.041.
- There are resistance areas near $0.051 and $0.055.
The price of ADA on Binance is analyzed at one-hour intervals from Mar 5 to Mar 15.
Price reached a low of $0.3993 on Mar 5. It has been gradually increasing since, with each low being higher than the previous one. Tracing these lows gives us an ascending support line.
The support line can act as a floor to price, preventing further downward movement. It traces the theoretical lower limits of the price.
The price has been increasing at the same rate as predicted by the line.
It is likely that the price will experience gradual increases following the support line until a decisive downward movement is initited. However, the support line alone is not sufficient in determining how long the increases will last or when the losses should begin.
The price reached a high of $0.0482 on Mar 9. A gradual drop ensued. Since then, the price has continued to make higher highs. Tracing these highs gives us the ascending resistance line.
Similar to the support line, the resistance line prevents further upward movement.
The resistance and support lines combine to create an ascending wedge, which is a bearish pattern, making price decreases more likely in the future.
The wedge is a better predictor of price fluctuations than the support or resistance lines alone.
The price is likely to trade inside the confines of the wedge until a point of convergence occurs, at which time we should expect an inevitable breakout or breakdown. Given the fact that the ascending wedge is a bearish pattern, a breakdown is more likely to occur. This further confirms the projection of an impending reversal.
The relative strength index (RSI) is an indicator which calculates the size of the changes in price in order to determine oversold or overbought conditions in the market.
Combining moving average convergence divergence (MACD) and RSI bullish/bearish divergence with support/resistance essentially predicts price fluctuations.
On Mar 15, the price made a high of $0.505. Later that same day, it continued to make a higher high at $0.507.
During the same interval, the RSI acted differently. While it made the first high at around the same time as price, it proceeded to make a second lower high.
This is known as bearish divergence and often precedes drops in price.
It is especially effective if bearish divergence occurs in a bearish pattern and vice versa. This is the case with ADA since the ascending wedge is a bearish pattern.
Using these indicators and patterns, it is likely that the price has created a short-term high and will drop to the support line before possibly breaking down.
The price of ADA on Binance is analyzed at six-hour intervals from Jan 7 to Mar 15 in order to better visualize possible reversal areas.
Resistance and support areas are formed when the price reaches a certain level several times. They can act as a ceiling/floor that prevents the price from moving further in that direction.
The first resistance area is found near $0.051, where the price is currently trading. The second one is found near $0.055 . If the price were to break out of the wedge, that would provide a likely reversal area. Based on our analysis, this is unlikely to occur.
The closest support area is found near $0.048, followed by support areas near $0.043 and $0.041. If the price were to break down from the wedge, these would provide likely reversal areas. Based on our analysis, it is likely that the price reaches at least one of these areas.
Summary of Analysis
Based on our analysis, price decreases for ADA are likely to occur in the future. If the price drops to the support line, this prediction will be partially validated. If it eventually breaks down, it will be fully validated. A breakout from the wedge would invalidate the prediction.
Do you think the price of ADA will break out or break down? Let us know in the comments below.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.