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Cardano (ADA) Price Continues to Slide as it Approaches 236-Day Support Level

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Written by
Valdrin Tahiri

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Edited by
Ryan Boltman

10 January 2022 16:32 UTC
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  • ADA has decreased by 65% since its all-time high.
  • There is support at $1.07
  • ADA is in wave five of a bearish impulse.
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Whether Cardano (ADA) breaks down or bounces at the current horizontal support area could determine the direction of the future trend.

Cardano has been decreasing alongside a descending resistance line since reaching an all-time high price on Sept 2. So far, it has fallen by 64% since the aforementioned all-time high. 

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Currently, the token is very close to the $1.07 horizontal support area, which has been in place for 236 days. A breakdown below it could trigger a very sharp fall.

ADA Resistance
Chart By TradingView

Cryptocurrency trader @CryptoCapo_ tweeted an ADA chart. He stated that the token is expected to bounce at the $1 horizontal support area. The are coincides with that outlined in the previous image.

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ADA Drop
Source: Twitter

ADA wave count

The movement since the aforementioned all-time high resembles a five wave bearish formation, in which ADA is in the fifth and final wave. This means that after the drop is complete, a sizeable bounce would be likely. 

A potential target for the bottom of this movement is found between $0.86 – $0.92. The target is found using the 0.618 length of wave one (black) and the 1.61 external length of wave four (white).

This would present a scenario in which ADA sweeps the June lows before reclaiming the $1.07 area and eventually breaking out from the descending resistance line.

ADA Count
Chart By TradingView
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This possibility would fit well with the readings from both the MACD and RSI, which have generated significant bullish divergences (green line)

Such divergences often precede bullish trend reversals, since they indicate that the price decrease was not accompanied with a similar decrease in technical indicators. This is considered a sign of weak selling pressure. So, it could lead to the proposed deviation and reclaim. 

However, this movement is not yet confirmed, and a continuous decrease in the ADA price could invalidate the divergences.

ADA Divergence
Chart By TradingView

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