Will ADA maintain the important level of support again?

Cardano (ADA) has been down since May 16 but is still trading above the strong support area at USD 1.

Despite the bullish retest, the technical indicators are still bearish over several time frames.

The long-term structure of ADA

ADA has fallen since hitting a high of $ 2.51 on May 16. So far it has fallen as low as $ 1.01 immediately on May 19th, creating a long wick underneath.

The bounces served to confirm the $ 1 zone as support. This is an important area as it previously acted as resistance at the 2018 all-time high.

Although the price is still above the support zone, the technical indicators are turning down. MACD is declining and almost cutting into the negative zone. The RSI is below 50 and the stochastic oscillator has created a bearish cross.

Hence, it is likely that the long-term trend will continue to decline.

Weekly ADA / USDT Chart | Source: TradingView

Current structure

The daily chart does not offer a clear structure. It looks like ADA is moving along a descending resistance line and there is potential horizontal support at $ 1.05, near the long-term support described above.

When combined with the descending resistance line, it creates a descending triangle that is considered a bearish pattern. In addition, the technical indicators of the daily timeframe are all bearish and provide signals very similar to those of the weekly timeframe.

If there is a breakdown, the next support is at $ 0.82.

Daily ADA / USDT Chart | Source: TradingView

Count waves

Trader @ Mesawine1 outlined the ADA chart, suggesting that another decline is expected to complete the fourth wave.

Source: Twitter

It looks like ADA is in the fourth (red) wave of a bullish impulse that started in March 2020. If so, it is currently completing a pullback with wave 4.

The USD 0.98 area is a suitable level for bottoming. As mentioned above, it is a horizontal support zone. This is also the third wave 0.618 fib retracement support and is in the center of the parallel channel.

However, as the technical indicators are bearish, a decline into the USD 0.60 zone seems more likely. This will be the 0.786 fib retracement support and the support line of the channel.

ADA / USDT 12-hour chart | Source: TradingView

ADA / BTC

The ADA / BTC chart is more bullish on the USD pair. Although the pair has been falling since May 19th, it trades in a symmetrical triangle.

It is currently right at the pattern’s support line. Although the symmetrical triangle is considered a neutral pattern, it appeared after an upward movement. Hence, the chance of an outbreak is higher.

Even so, the technical indicators are falling and providing mixed signals along with the price movement.

The next levels of resistance and support are 4,700 and 2,850 satoshis.

Daily ADA / BTC chart | Source: TradingView

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

SN_Nour

According to Beincrypto

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