Cardano (ADA) took a dip this July 21 as the market supports increasing selling pressure on a major upcoming hard fork around its most reliable resistance levels in 2022.
ADA price may drop 20% by early August
ADA price fell 5% intraday to $0.476. The downside move came as part of a broader retrace that began a day after its 50-day exponential moving average (50-day EMA; red wave in chart below) briefly climbed near $0.50. Had happened.
The 50-day EMA has been acting as a symmetrical resistance level for ADA since October 2021.
Additionally, the upper trendline resistance of a broad descending channel pattern strengthened selling sentiment around the 50-day EMA wave of ADA. Earlier in June, the same resistance confluence caused a 35% drop in price towards the lower trendline of the channel.
Therefore, ADA’s fresh correction move led the price to $0.384 in July or early August, which is about 20% lower than today’s price.
2018 Fractal Suggests $0.20 per ADA
However, a separate analysis shows that ADA declined to a deeper level above $0.384.
Written by TradingShot, the Bearish ADA forecast draws a comparison between the ongoing correction and the correction seen during the 2018 market crash, as shown below.
In detail, the 2018 chart above shows that ADA is undergoing several bearish periods near its 50-day EMA (orange wave), while trending downwards in a descending channel pattern. The coin ended its downtrend after a drop of around 93% from its local high.
“Based on 1D RSI conditions, we are also in the third (3) and final stage of the downtrend,” TradingShot wrote.
“So if ADA holders want to avoid this, they will have to watch for a price break above the 1D MA50 and trade above it for at least a week. Otherwise, it is possible to complete a -93% drop from above at around 0.200 Is.”
When hard fork?
The latest ADA price correction appears in the days before the Cardano hard fork.
Dubbed “Vasil”, Hard Fork was scheduled to go live in June, but was delayed until the last week of July due to several outstanding bugs. Nevertheless, as of July 21, Input Output Hong Kong (IOHK), the firm behind the Cardano blockchain development, has not announced an exact launch date.
Vasil is expected to bring significant performance and capacity upgrades to the Cardano blockchain, including faster block creation and higher transaction speeds. From a fundamental point of view, the upgrade could boost ADA adoption due to improved network efficiency.
But Cardano has a history of registering sharp price corrections following most network upgrades, suggesting the prevailing “sell news” sentiment in the market.
For example, the Alonzo upgrade to the blockchain in September 2021 partly prompted ADA to rise by more than 200% to a record high of $3.16 before its launch. But after the upgrade, the Cardano coin is down by over 85%.
ADA is only up 25% since its May 10 local low of $0.384, indicating that Vasil’s influence on the market is limited.
But not everyone is convinced. For example, analyst Lark Davies believes that the coin will “rip” after the hard fork, as it manages to hold the 50-day EMA as support.
#cardano $ada Having broken his 50 day EMA, we now need Charles to announce the date of the Vasil Hard Fork and this puppy will rip! pic.twitter.com/yQTiCiCE6H
— Lark Davis (@TheCryptoLark) 20 July 2022
Until then, ADA will remain under pressure to “sell the news”, further pressured by the ongoing macro risks and their negative impact on the crypto markets.
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