Cardano was approaching the next higher low within a symmetrical triangle and was dangerously close to a breakdown from the pattern. A move below $2.07 could spiral into some unwanted losses by opening a route to $1.83.
This outlook was backed by the daily RSI, which was rejected at the mid-line after a fourth breakout attempt in nearly a month. At the time of writing, ADA traded at $2.13, up by a marginal 0.8% over the last 24 hours.
Cardano Daily Chart
Source: ADA/USD, TradingView
Lower highs at $2.45, $2.37 and $2.14 combined with higher lows at $1.91, $2.07 and $2.12 gave rise to a symmetrical triangle setup on ADA’s daily chart. Currently trading below the 50-SMA (yellow) and 20-SMA (red), momentum continued to side with the sellers as ADA remained exposed to a breakdown from the pattern.
If ADA is unable to snap a fresh higher low and conceded to downwards pressure below $2.07, bears could run rampant over the coming week. Now although ADA can minimize its losses between $1.92-$2, the lack of strong support levels within this region would turn out to be a major disadvantage for the bulls.
The 200-SMA (green) combined and $1.83 would be ADA’s best-chance of a recovery in case of an extended drawdown. On the other hand, bulls would be eyeing for a close above $2.25 in order to flip the tide in their favor. ADA’s development following this move has been discussed in an earlier article.
ReasoningÂ
Ideally, the RSI should have broken above 50 after a fourth assault at the mid-line. However, constant downwards pressure has restricted ADA from unlocking its potential since last week.
As per the Directional Movement Index, ADA’s trend was in favor of the sellers as the -DI traded above the +DI. Even though the Awesome Oscillator formed a bullish twin peak, ADA failed to capitalize on this setup and was subdued below the equilibrium level.
ConclusionÂ
ADA was running on borrowed time and chances of an upwards breakout were diminishing each day. While the indicators did some promise, the RSI and AO have been unable to ascend above key levels for now.
If ADA weakens below $2.07, the market would be exposed to a near 13% sell-off towards the $1.80-mark. Hence, it’s imperative that ADA gathers the strength for a move above $2.25 as soon as possible
