The Cardano (ADA) price is ready for a short-term relief rally, but another drop could follow afterward.
ADA is the native token of the Cardano blockchain platform, created by Charles Hoskinson. The ADA price has been decreasing since August 2021, when it reached an all-time high of $3.160. So far, it fell to a low of $0.239 in December 2022.
The price failed to reclaim the $0.400 long-term resistance area. This is a crucial area since it has intermittently provided support and resistance since 2018 (green icon). So, whether it reclaims it or gets rejected could have a bearing in the future trend.
Reclaiming the $0.400 area could lead to an increase toward $0.570. However, continuing the downward movement could lead to a fall to the next support area at $0.160.
The weekly RSI is bearish. At the same time the ADA price got rejected, the RSI was rejected by the 50 line and has moved downward since. Therefore, more is needed to determine the future price action.
Cardano (ADA) Falls After Rejection
The technical analysis from the daily time frame shows that the ADA price has fallen since it validated an ascending support line as resistance on Feb. 16 (red icon).
Currently, the ADA price trades at the 0.5 Fib retracement support level at $0.330. This is both a Fib and a horizontal support level. Therefore, whether the price fall below it or bounces could determine the future trend.
In case of a breakdown, there would be support at the 0.618 Fib retracement level at $0.309. But, since this is only a Fib and not a horizontal area, it might not be sufficient in initiating a reversal.
Similar to the weekly time frame, the daily RSI is below 50 and falling. Therefore, it provides a bearish outlook.
Where Will Correction End?
Finally, the wave count shows that the ADA price completed a five-wave downward movement. What usually follows is a relief rally. The fact that the correction ended at a confluence of support levels and the bullish divergence in the short-term RSI supports the possibility of a relief rally.
If one occurs, the price could increase to the 0.5-0.618 Fib retracement resistance area (red) at $0.371-$0.384. Afterward, another drop is expected.
On the other hand, an increase above $0.421 would invalidate this bearish hypothesis. In that case, the Cardano price could increase to $0.570.
To conclude, the most likely Cardano price forecast is a relief rally toward $0.371-$0.384 before another fall toward $0.309. Increasing above the current yearly high of $0.421 would invalidate this bearish outlook. In that case, ADA could pump to $0.570.
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