MEXCHow Lower Top Formation Puts Cardano Price at Risk of Losing $0.5 Support
Highlights
- A rising support trendline has acted as a suitable accumulation zone for buyers during a market correction.
- A confluence of several technical support at $0.57 creates a high area of interest for buyers.
- The intraday trading volume in the ADA coin is $632 Million, indicating a 0.14% gain.
Amid a recent upswing in the crypto market, the Cardano price showed a notable reversal from the 100-day EMA slope at $0.57. This positive turnaround uplifted the coin value to 20% within a week to hit a high of $0.683. However, overhead supply at this barrier hints the traders are selling at a bullish swing which promotes the formation of bearish reversal patterns.
Also Read: Bitgert Coin’s Price Surge Defies the Market Trend of Solana and Cardano
Cardano Price Recovery at Risk as Bearish Setup Looms
The Cardano coin entered the current correction trend in mid-March when the price reverted from a high of $0.81. The bearish pullback tumbled the altcoin value by nearly 30% to hit a low of $0.569.
While the current market recovery pushed the ADA price to $0.636, the overhead supply at $0.683 barrier hints traders are selling this asset at a bullish swing. The formation of the bearish candle-evening star at resistance indicates a local top developing which may plunge the Cardano price to $0.57 support.
An analysis of daily charts shows downswing will reverse the formation of a reversal chart pattern called the head and shoulder pattern. This bearish setup commonly spotted at the market top suggests a shift in trend control toward sellers, signaling a significant correction may be in progress.
However, the pattern’s validation hinges on ADA’s price dropping below the key neckline support of $0.57. Losing this support will also plunge this altcoin below a long-coming trendline which carried a recovery trend for the past five months.
The post-breakdown fall will prolong the correction trend to $0.46, registering a potential loss of 18%.
On a contrary note, if the buyers defend the rising support trendline, the buyers will have an opportunity to counter and invalidate the bearish thesis.
Technical Indicator:
- Relative Strength Index: The RSI slope lowering below the 50% floor indicates the market participants are turning bearish on this asset.
- BB Indicator: The downswing in the lower boundary of the Bollinger band indicator indicates the sellers are driving a high momentum downfall.
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