Cardano (ADA) price drop from last week is putting the entire previous bullish structure into question.
This caused the price to lose its horizontal support level and collapse from its short-term pattern. The price now risks another sharp sell-off.
ADA price declined after a bearish candlestick
Readings from the long-term weekly time frame show that the price of the ADA token fell sharply last week, forming a bearish engulfing candle. This is a type of bearish candlestick where the entire increase from the previous period is nullified in the next period. It was confirmed by closing lower than the opening of the previous period.
Additionally, the candle caused ADA price to drop below the $0.425 horizontal area. This was a critical development because it indicated that the previous hack was invalid. As a result, instead of acting as support, the $0.425 area will act as resistance again.
Although the price had previously breached a descending resistance line that had been in place since the all-time high, the recent price action indicates that the trend is to the downside. If the decline continues, the next closest support area will be at the $0.315 average price.
Cardano Price Prediction: Rebound or Crash?
Technical analysis from the daily time frame also provides Cardano price prediction. The reasons for this come from both the price action and the indicator readings.
First, the price of the ADA token collapsed from an upward parallel channel on April 20. Previously, the price has been trading in this channel since March 10th.
The upward parallel channel is characterized by the movement of the price between parallel resistance and support lines, It is generally considered a bearish pattern. Therefore, a crash is the most likely outcome of this pattern. As shown earlier, the price broke out of the channel on the 20th of April.
Secondly, the daily Relative Strength Index (RSI) has broken out of the 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 determine whether to accumulate or sell an asset. Readings above 50 and bullish indicate that the bulls still have an advantage, while readings below 50 indicate the opposite.
Due to the bearish readings, the RSI supports the continuation of the decline. If the decline continues, the nearest support area will be at $0.325.
Despite the bearish Cardano price outlook, restoring the channel support line will invalidate this bearish view and may cause a rally towards $0.48.
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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.