Cardano (ADA) triangle setup forecasts nearly 50% drop in prices

NEW DELHI (CoinChapter.com) — Blockchain platform Cardano’s native token ADA prices have formed a bearish technical setup, called the descending triangle pattern, that might push the token’s prices to levels last seen in early Jan 2021.

In detail, a descending trendline connecting swing highs and a horizontal trendline joining swing lows form the pattern. The height of the triangle’s thickest section determines the price target in a descending triangle setup.

Per the rules of technical analysis, ADA prices might fall to $0.26, a drop of 48% from current levels.

Cardano founded Charles Hoskinson shared a cryptic tweet on Sept 10 indicating that he was working on “something cool” in Papua New Guinea. A project might add some tailwinds to ADA’s price action and help the altcoin invalidate the bearish setup.

Also Read: Cardano (ADA) Goes Skyward After September Vasil Hard Fork Confirmed.

The Cardano token recently registered a rally that saw prices jump 15.4% between Sept 7’s low ($0.45) and Sept 10’s high ($0.52) levels. The bull run fizzled out over the weekend. But, the long tails on the daily candles indicate bulls and bears are vying for control of ADA price action.

ADA Prices See A “Golden” Lining

Meanwhile, ADA’s 20-day exponential moving average (20-day EMA, red wave) might move above the token’s 50-day EMA (purple wave) to form a bullish pattern called the Golden cross. Traders usually consider the pattern a buy signal.

Completing the pattern might instigate a rally that would likely see the ADAUSD pair conquer resistance from its 100-day EMA (blue wave) near $0.53. Moving above the 100-day EMA resistance would help propel the Cardano token to resistance near $0.57.

Worth noting is that ADA prices have been moving between $0.58 and $0.43 since Jun 12. It is likely that the upper trendline of the channel would rebuff further uptrend.

Conversely, if the downtrend continues, ADA prices might fall to support near $0.49, near the support confluence of 20-day EMA (red wave) and 50-day EMA (purple wave). Marketwide sell-off could see the Cardano token break below immediate support to test support near $0.46 before recovering.

The relative strength index for ADA remains neutral, clocking 55.87 on the daily charts, with the RSI trendline moving laterally.

At writing, ADAUSD was trading at $0.5, down 0.8% on the day.

CoinChapter previously highlighted a key juncture for Cardano