Cardano (ADA) price has fallen 46% from its yearly high and is currently facing a decisive price level for a bullish reversal. Here’s what you need to know:
Cardano Price Analysis: Daily Chart
The ADA/USD daily chart is currently charting a path within a descending channel, which has defined the downtrend since the beginning of March. On Monday, ADA price peaked near $0.475, encountering substantial resistance at the upper boundary of the channel and the critical 20-day exponential moving average (EMA), which is currently at $0.47.
![Cardano faces decisive price level for bullish revival 1 Cardano Price](https://thegurumedia.com/wp-content/uploads/2024/05/ADAUSD_2024-05-08_11-44-49.png)
In the short term, this resistance level is crucial, as it coincides with historical price rejection points, confirming its importance. At press time, ADA was trading at approximately $0.44.
The convergence of the 20-day EMA ($0.47), 50-day EMA ($0.54) and 100-day EMA ($0.51) above the current price level illustrates a dense zone of resistance. The 200-day EMA at $0.52 reinforces this barrier, emphasizing a strong bearish momentum.
The Relative Strength Index (RSI) on the daily chart is currently at 38, which does not venture into oversold territory (below 30) but indicates bearish momentum with the potential for further decline unless a reversal occurs.
For a bullish reversal, ADA needs a sustained break above the $0.47 mark (20-day EMA) accompanied by high volume to confirm the breakout of the descending channel and change market sentiment. Then, the cluster of EMAs becomes the center resistance zone.
Crossing this band is of utmost importance in order to build upside momentum for a break above March’s yearly high of $0.81. Otherwise, the ADA price may trend towards the midline of the channel and fall below $0.40.
Detailed Weekly Chart Overview
Transitioning to the weekly chart, the broader picture also underscores the bearish sentiment that has dominated ADA since it reached its peak of $3.17 in late 2021. The series of lower highs and lower lows is a classic representation of a downtrend.
![Cardano faces decisive price level for bullish revival 2 Cardano Price](https://thegurumedia.com/wp-content/uploads/2024/05/ADAUSD_2024-05-08_11-45-11.png)
Price action currently remains suppressed below the long-term moving averages: the 20-week EMA at $0.52, the 50-week EMA at $0.48, the 100-week EMA at $0.51 and the 200-week EMA at $0.52, all sloping downwards, underlining persistent selling pressure in recent weeks.
Fibonacci retracement levels, taken from the high of $3.17 to the low of $0.22, provide additional information. ADA is currently trading near $0.44, which is above the key psychological and technical support of $0.40.
The closest significant Fibonacci retracement level is the 0.236 level at $0.918, which ADA has struggled to overcome. A breach above this level could open the way to higher Fibonacci levels at $1.348 (0.382) and $1.697 (0.5), which would require a significant change in momentum and buying interest.
Overall, for ADA to break out of its bearish restraints, attention must be focused on daily resistance at approximately $0.47 (descending channel breakout). Overcoming this barrier would be essential to confirm a bullish reversal. Until this level is decisively breached with substantial volume, the outlook remains tilted towards a bearish continuation.
Featured image from Bitget, chart from TradingView.com
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