Cardano (ADA) price is trading above a crucial long-term horizontal support level. But, he is Struggle to regain a minor horizontal resistance level.
Short-term readings indicate that the price of ADA will continue to correct in the short term. After that, it can make a higher low and resume its upward movement.
Cardano finds support after the failed breakout
ADA technical analysis for the weekly time frame is showing that the price of ADA broke out from the long-term bearish resistance line at the beginning of January. Prior to the hack, the line had been in place for over a year. Therefore, a breakout from it was expected to lead to a significant upward movement.
However, this was not the case. After the breakout, ADA price returned to the descending resistance line twice, confirming that it was support both times (green symbol).
The latest validation took place on June 15 and also coincided with a bounce at the $0.25 horizontal support area. ADA price is now trading slightly above this horizontal support area.
The weekly RSI gives an indefinite reading. When assessing market conditions, traders use the RSI as a momentum indicator to determine whether the market is overbought or oversold and to determine whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is up, the bulls still have the advantage, but if the reading is below 50, the opposite is true.
Although the RSI is rising, it is still below 50. This is a sign of an indefinite trend.
ADA Price Forecast: The wave count shows weakness
A closer look at the daily timeframe price action and wave count indicates a negative outlook for ADA price.
First, the price action gives two bearish signs. The first is that the $0.30 horizontal resistance area has rejected the price, while the second is that ADA is trading inside an ascending parallel channel.
An ascending parallel channel is a bearish pattern, which means that it usually leads to breakdowns.
After that, Elliott wave supports the breakdown. Elliott Wave theory involves the study of long-term recurring price patterns and investor psychology to determine the direction of a trend.
Based on the stats, ADA price appears to be completing its fifth and final wave of downward movement (represented in white), which indicates the potential for new lows.
However, due to the extreme extension of the third wave, the fifth wave may end near $0.25, and become a truncated one as a result. A decline is likely to coincide with the long-term horizontal support previously identified at $0.25.
Despite this bearish outlook for ADA price, a close above the $0.30 resistance area would mean that the trend is still bullish. ADA price could quickly rally to the next resistance at $0.40 in this case.
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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.