The coin is trading within a descending triangle formation and risks correcting by 10 – 15%.
Jaipur (CoinChapter.com) — Ever since the tide turned against ADA bulls after the crypto correction last month, upsides have been limited for Cardano’s native cryptocurrency token.
Cardano faces tough resistance
The ADA/USD pair has printed a series of lower highs for almost one and a half months. The coin has stayed firm above the multi-month $1 support. But an absence of significant buying pressure has kept it restricted within a descending triangle setup.
Buyers attempted a recovery after the recent price retracement on June 21. However, the momentum wasn’t enough for a full-blown breakout. All cryptocurrencies slipped down in unison, so this is nothing less than a snowball effect. ADA holds an 82% correlation with Bitcoin and copies almost all price moves of the benchmark cryptocurrency.
Due to the failure to surmount the multi-month trendline resistance, the token that underpins Cardano’s smart contract platform risks dropping significantly.
It’s not just about breaking past the descending triangle formation.
ADA/USD’s restricted trend beneath the 20-day exponential moving average (EMA) wave since the last 20 days also confirms that a dip is near. In the given scenario, the trading pair stands to retest the local support at $1.15, which acted as a launchpad for the recent recovery attempt. This would be a near 15% correction from the $1.35 top, flipped to resistance by bears.
Any more selling pressure beyond that could result in the 5th largest crypto dropping all the way down to $1. The multi-month support also corresponds with the crucial 200-day moving average (MA) wave.
However, if the ADA/USD pair can maintain its strength above $1, bulls can still keep their hopes alive. The current bearish MACD (Moving Average Convergence Divergence) cycle seems on the verge of closing out. Intraday/swing traders could use this as an opportunity to prop prices back above the 20 EMA wave ($1.42).
For now, a decline is very much on the cards. Since the MACD bullish cycle on the 4-hour chart is nearing its end. Therefore, it’s recommended to either book profits or follow a wait-and-see approach to entering new buying positions.
Himadri is an active investor in cryptocurrencies and upcoming blockchain technology projects. He has been a part of the digital asset space since 2017 and has held multiple positions as Social Media Manager, Assistant Editor, Sponsored Content Manager, Cryptocurrency Journalist roles in reputed news outlets like NewsBTC, Bitcoinist and CryptoPotato. He has also helped numerous blockchain projects gain prominence through terse and succinct marketing/technical content. Himadri comes with a marketing and engineering background, and has worked with reputed names such as GE Healthcare, Volvo Trucks and Polycom before moving into crypto.
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