Since striking its ATH on 2 September, Cardano (ADA) initiated its downtrend and practically swayed below its 20-50 EMA. The decline proved to be rather menacing for the bulls as they failed to defend the $1-mark.
A close above the $0.9-mark would position ADA for a possible retest of its Point of Control (POC). Post which, it could face a pullback from near the $1.1-zone and traverse back into its long-term trend. The seventh-largest crypto most likely positioned itself to reclaim the vital $1-support (now resistance). At press time, it traded at $0.888, down by 1.2% in the last 24 hours.
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ADA Daily Chart
Since its ATH, ADA has formed a six-month-long descending channel (reversal pattern, yellow) while the alt was on a steep downtrend. Furthermore, it lost over 40% of its value from 10 February after forming a bearish flag and pole on its daily chart.
As a result, it gravitated towards its 9-month low on 24 February while the buyers stepped in to defend the $0.82-level. It becomes vital to note that this level of support has stood as a testing floor for nearly a year. As a result, for the past two days, the bulls have been exerting pressure and rejecting lower prices.
From here on, assuming the bulls are keen on maintaining the $0.82-mark intact, the alt eyed at a 20 EMA retest followed by reclaiming the $1-support. Historically, ADA has picked itself up from the lower trendline of the down-channel and tested its 50 EMA before conforming to the downtrend. However, the next few candlesticks would confirm whether the history would repeat itself or not.
The bearish RSI showed an expected revival from its oversold mark. Any close above the 38-mark would likely cause a retest at the 44-point hurdle. A recovery towards the midline seemed conceivable in the days to come as the bulls endeavored to topple these barriers.
The DMI reaffirmed the heightened bearish influence. As the -DI approached its long-term peak, the chances of a recovery in the coming days are high.
While a trend reversal still might require exceptional efforts on the part of bulls, a test of its Point of control while finding a close above the 20 EMA seemed probable in the medium-long term. Even so, traders/investors should keep a close eye on Bitcoin’s movement as ADA shares a 71% 30-Day correlation with the king coin.
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