The Cardano (ADA) price broke down from a short-term pattern and is nearing a crucial support level at $0.327.
ADA is the native token of the Cardano network. Its founder, Charles Hoskinson, recently tweeted about whether the Cardano blockchain should add KYC to its Layer 1 protocol. He argues KYC verification can co-exist with a decentralized protocol.
Cardano Price Loses Momentum
The Cardano price increased by 68% in Jan., leading to a high of $0.399 on Jan. 31. The upward movement continued for two more days, but the price has fallen since.
The decrease was preceded by a considerable bearish divergence in the daily RSI (green line). The indicator is now at risk of falling below 50. This is a sign of a bearish trend and could indicate that the upward movement is complete.
In any case, the price is also close to the $0.327 support area, created by the 0.5 Fib retracement support level and a horizontal support area. Due to this confluence, the area could initiate a bounce back to $0.40.
However, since there is no more support below that area, a close below it could trigger a sharp fall to $0.25. Since it would also cause the daily RSI to decrease below 50, it could mean that the upward trend is complete.
Cardano Price Begins Short-Term Drop
The technical analysis from the short-term three-hour chart suggests that the price is still correcting the entire upward movement that began in Jan. The increase was a five-wave upward movement (black), in which wave five developed into an ending diagonal, hence the shape of the wedge.
If correct, the ADA token price is now nearing the bottom of the A wave in an A-B-C corrective structure. It is right at the top of the $0.327-$0.348 support area, created by the 0.382-0.5 Fib retracement support level. Therefore, the price is likely nearing the bottom of the A wave and will soon begin a relief rally.
Afterward, the entire correction could end at the 0.5 Fib retracement support level at $0.327.
To conclude, the most likely Cardano price forecast is a gradual consolidation toward $0.327 before an upward movement that takes the price to $0.40. A daily close below $0.327 would invalidate this bullish outlook and could send the ADA price to $0.25.
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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.