Cardano Flashes Warning Signs As Further Breaks Lower Seem Imminent
Financial markets have been on a roller coaster ride over the past several months with holdings have escaped unscathed, yet Cardano (ADA) seems to have been hit harder than the overall crypto market, dropping out of the top five cryptocurrencies in relation to market cap. ADA went on an impressive run to close out 2021, reaching highs of just below $3.00 before losing several critical support levels due to the potential for upcoming policy shifts, the Ukrainian-Russian conflict, and market wide uncertainties before bottoming out at $0.84, which it is currently trading at.
By Andrew Senior
March 7th, 2022
Cardano has several critical resistance levels it must surpass before breaking out of the downward trend. There is heavy resistance sitting only a shade above ADA’s current price at $0.89, with over 2 million ask orders currently open at that price.
ADA has found solid support at $0.84, managing to maintain that valuation for the past several days but falling short of overcoming it. Several signs point to a likely end to the consolidation sooner rather than later with the potential for a huge move upwards on the horizon.
ADA attempted to break above the $1 key resistance level last week, but ultimately failed with the bears quickly pulling the valuation back down to the $0.80’s. price quickly retraced down to retest the $0.84 mark. If buyers fail to push the price higher, then sellers may be able to take the opportunity to pull ADA further down potentially testing the next major support level at $0.68.
Cardano’s trading volume was substantially lower over the past 48 hours. If fears over the invasion of Ukraine by Russia persist into the trading week, ADA will likely drop lower, any large drops in price action and volume would serve as warning signs to a continued downside. The daily relative strength index (RSI), a useful tool to gauge momentum, has consistently been making higher lows since it touched 30 points, showcasing that ADA is at a decision point. The daily moving average convergence divergence (MACD), a useful tool for helping to determine if bullish or bearish metrics are strengthening or weakening, is steadily approaching a bearish crossover.
Several micro and macro factors are merging to keep pressure on Cardano, with several technical factors also highlighting lingering weakness. Without a continued and prolonged increase in demand, the $0.84 support level is likely to fall. The overall sentiment for several financial markets, including crypto, is rather bearish which could push ADA to new lows if Monday’s price action opens in red. A future breakout remains highly likely for the proof-of-stake blockchain platform, but further drops seem likely first.
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