The Cardano (ADA) price has performed positively in 2023, spurred by positive Cardano news relating to the launch of Djed. However, a short-term correction is on the horizon.
Djed is community driven and has a mechanism of overcollateralization by 400%-800%. It is pegged to the U.S. dollar, backed by ADA and has SHEN as its reserve coin.
If the reserve ratio were to drop below 400%, it will not allow the minting or the burning of SHEN and minting of Djed. If it goes above 800%, users will be unable to mint SHEN. The minimum minting and burning amounts for Djed are 5,000 and 1,000, respectively.
However, ADA, the native token of the Cardano network did not react to the launch, posting a less than 1% increase.
Cardano Begins to Lose Steam
The Cardano price has been on a tear in 2023, at one point having increased by 67%. This caused a breakout from a descending resistance line and led to a high of $0.400 on Jan. 30.
However, the ADA price created a bearish engulfing candlestick the next day, potentially indicating that the upward movement is complete. Moreover, the drop confirmed a bearish divergence in the daily RSI.
As a result of these bearish readings, a downward movement could follow soon. If that occurs, the ADA token price could re-test the $0.328 horizontal support area.
On the other hand, the main resistance area is at $0.417. A daily close above it would indicate that the upward movement will continue and could lead to highs near $0.55.
Cardano Price Prediction for Feb: Upward Movement Is Done
The technical analysis from the short-term six-hour time frame supports the continuation of the downward movement. As a result, it gives a bearish Cardano price prediction for Feb.
The Cardano price has completed a five-wave upward movement, in which wave five was an ending diagonal, as evidenced by the shape of the wedge.
A breakdown from the wedge would confirm that this is the right count and begin a downward movement toward the 0.382-0.5 Fib retracement support levels at $0.319-$0.338. The correction may take the majority of Feb, while the wedge breakdown could occur during the next 24 hours.
On the other hand, a decisive close above the wedge would invalidate this bearish Cardano price forecast. As outlined prior, this could initiate an upward movement toward $0.55.
To conclude, the ADA price prediction for Feb. is bearish. A decrease toward the $0.319-$0.338 region is expected. A daily close above $0.39 would invalidate this bearish forecast and could catalyze an upward movement toward $0.55.
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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.