The Cardano (ADA) price decrease from last week puts the entire previous bullish structure in doubt.
This caused the price to lose a horizontal support level and break down from its short-term pattern. The price now risks another sharp sell-off.
ADA Price Falls After Bearish Candlestick
The readings from the long-term weekly time frame show that the ADA token price fell sharply last week, creating a bearish engulfing candlestick. This is a type of bearish candlestick in which the entire increase from the previous period is negated in the next one. It is confirmed with a close below the previous period opening.
Additionally, the candlestick caused the ADA price to fall below the $0.425 horizontal area. This was a crucial development since it indicated that the previous breakout was invalid. As a result, instead of acting as support, the $0.425 area will act as resistance again.
Even though the price previously broke out from a descending resistance line that had been in place since the all-time high, the recent price action suggests that the trend is bearish. If the decrease continues, the next closest support area will be at an average price of $0.315.
Cardano Price Prediction: Bounce or Breakdown?
The technical analysis from the daily time frame also provides a Cardano price prediction. The reasons for this come from both the price action and indicator readings.
Firstly, the ADA token price broke down from an ascending parallel channel on April 20. Previously, the price had traded in this channel since March 10.
The ascending parallel channel is characterized by the price moving between two parallel resistance and support lines, generally considered a bearish pattern. Therefore, a breakdown is the most likely outcome of this pattern. As outlined prior, the price broke down from the channel on April 20.
Secondly, the daily Relative Strength Index (RSI) broke down from an ascending support line (green line) and is now below 50. Market traders use the RSI as a momentum indicator to identify overbought or oversold conditions and to decide whether to accumulate or sell an asset. Readings above 50 and an upward trend indicate that bulls still have an advantage, whereas readings below 50 suggest the opposite.
Due to the bearish readings, the RSI supports the continuation of the decrease. If the decrease continues, the closest support area will be at $0.325.
Despite this bearish Cardano price forecast, reclaiming the channel’s support line will invalidate this bearish outlook and could cause an increase toward $0.48.
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