Cardano (ADA) price has collapsed from an important pattern in the daily time frame and risks falling below a crucial horizontal support level.
If this happens, ADA price will confirm that the trend is down. This will likely accelerate the continued decline.
Cardano price rebounded but failed to recover the resistance
Technical analysis on the daily time frame provides a pessimistic price forecast for Cardano. This can be attributed to both indicator readings and price action.
Specifically, on April 20, the ADA token price fell below a long-term ascending parallel channel that has been trading since March 10.
This pattern is bearish. It involves the price moving between parallel resistance and support lines before the final breakdown. ADA subsequently validated the channel as resistance on April 27 (red icon) before continuing lower.
Moreover, the daily relative strength index (RSI) also gives a bearish reading below 50. Market traders use the RSI as a momentum indicator to identify overbought or oversold conditions, and to determine whether an asset should accumulate or sell.
Readings above 50 and bullish indicate that the bulls still have an advantage, while readings below 50 indicate the opposite.
At the same time that the price collapsed from the channel, the indicator moved below 50. This confirms the validity of the collapse.
ADA Price Prediction: Is Crash Imminent?
The price action from the short-term six-hour time frame is showing that ADA price has fallen below the descending resistance line since April 15th. Therefore, the trend is considered downward until the price breaks.
Currently, ADA is trading at the confluence of support levels at $0.36. The support consists of a horizontal support area and the 0.618 Fibonacci retracement support level.
The principle behind Fibonacci retracement levels indicates that after a significant price move in one direction. The price will correct or partially return to the previous price level before continuing in its original direction.
The Fibonacci level of 0.618 is the most important and often acts as a bottom during corrective movements.
Because of the above, if ADA price breaks down from the $0.36 horizontal support area, it could drop to the daily time frame support at $0.33 and possibly reach $0.30.
However, if a breakout occurs from the short-term line, an increase towards $0.42 is on the cards.
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In line with 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 and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.