Cardano (ADA) has created a false breakout above an important resistance level, and it may continue to decline in the near future.
Weekly outlook
The price of Cardano (ADA) has fallen below the 20-week MA since breaking down below it on November 15th, 2021. During this time, it reached a low of $0.24 in late December 2022 before beginning its current uptrend.
This uptrend has helped the price break above the 20-week MA and retest the horizontal resistance area at $0.42. Although it was rejected, ADA has successfully flipped this MA as support after creating a false breakout in the week of March 6-13 (red circle). This move has also helped ADA create a higher low, marking the end of the downtrend.
Subsequently, the price of ADA skyrocketed and broke above the $0.42 level in the week of April 10-17, reaching a new yearly high of $0.46. However, it faced strong selling pressure at higher levels and fell back below the $0.42 area. This is a bearish signal that often leads to further declines. Therefore, the price of ADA may retest the 20-week MA at $0.36 once again.
However, despite this weakness, the price of ADA has created a higher high and higher low structure. Therefore, the trend is still considered bullish until the 20-week MA is broken.
Breaking down below the ascending parallel channel
The price of Cardano (ADA) has broken down below a ascending parallel channel and confirmed it as resistance on April 26th. This indicates that the bears has taken control of price action.
The nearest support area is found at $0.38, while the next important support area is at $0.34, formed by the rising support line and horizontal support area.
The RSI indicator has dropped sharply from overbought territory and fallen back below 50, supporting further declines. Therefore, the price of ADA is likely to break below the support area at $0.38 and decline towards the next support area at $0.34.
Conclusion
The most probable outlook shows that the price of ADA will continue to decline in the near future. The nearest support area is at $0.38, while the next important support area is at $0.34.
The trend is still considered bullish until the 20-week MA ($0.36) is broken.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
Read more:
- This Altcoin May Rise Strongly In May On Positive News
- PEPE Token Price Surges Over 100% In 24 Hours, Reaches ATH