Cardano (ADA) has been rising since hitting a low on May 12. It is possible that the rise will eventually lead to a breakout from the longer term descending parallel channel.
ADA has been declining since reaching an all-time high of $3.10 on September 2, 2021. The downside movement caused it to break through the ascending support line already existing since March 2020. This gave rise to a low of $0.40. 12 May.
Currently, the price is trading above the 0.382 Fib retracement support level of $0.45. Measured from the all-time high, it has declined by 83 per cent.
The weekly RSI (Green Line) was bearish prior to the full downside movement. The divergence trend line is still intact. A breakout above this would be needed to consider a bullish trend reversal likely. The weekly RSI for ADA has hit a low of 31, which is the lowest price since December 2018.
Apart from the current Fibonacci support levels, there is strong support at the $0.23 and $0.125, 0.5 and 0.618 Fibonacci retracement support levels respectively. The latter is also a horizontal support zone.
(The logarithmic chart is used in the chart below to better visualize larger price movements).
Renowned Traders and Investors @bobloukas Tweeted a chart from ADA stating that the coin would eventually drop to $0.10.
If the downside movement continues, it will be very close to the mentioned 0.618 Fibonacci retracement support area.
Potential ADA Bounce
The daily chart is showing that ADA is declining within a descending parallel channel, which has been declining since the all-time high. Such channels usually contain corrective activities.
The above happened on May 12 in the middle of the channel (green icon) and was validated as support.
There are two interesting developments in the daily RSI that make it decisively bullish.
Firstly, it is generating a bullish divergence (green line) from the May 12 lows. Secondly, it has been broken up by a descending trend line (dashed). Such divergence often precedes a breakout in price.
As a result, it is possible for ADA to break away from the channel. If there is a breakout, the price is likely to move towards the nearest support area at $1.20.
short term movement
Finally, the six-hour chart shows that ADA is declining below a descending resistance line since March 21.
Similar to the daily chart, the 6-hours RSI has broken below its bearish trend line (green). As a result, it is possible that the price will soon follow.
If it does, the nearest resistance area will lie at $0.80. It will also coincide with the resistance line of the previous long term channel. So, it can be considered as a very important resistance area.
be for[in]Latest Bitcoin (BTC) Analysis of Crypto, click here