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Cardano Could Drop To $0.54 If This Support Gives Out, Analyst Says
An analyst has explained how Cardano is retesting the support line of a technical analysis (TA) pattern, losing which could spell a bearish outcome for the coin. Cardano Is Currently Trading Inside A Descending Channel In a new post on X, analyst Ali Martinez has talked about a pattern forming in the 3-day price of Cardano. The pattern in question is the Descending Channel from TA, which occurs when an asset observes consolidation toward a net downside between two parallel trendlines. The top line tracks successive lower highs in the price and the bottom one lower lows. When the cryptocurrency is inside the channel, it’s probable to encounter resistance at the former and support at the latter. Related Reading: Bitcoin Sharks & Whales Show Highest Growth Since Feb: Confidence Returning? In the scenario that either of these levels don’t hold up during a retest, the asset can witness a breakout in that direction. This means that a surge above the channel can be a bullish sign, while a fall under it a bearish one. Now, here is the chart shared by the analyst that shows the Descending Channel that the 3-day price of Cardano has been trading inside for the last few months: As is visible in the above graph, Cardano found a rebound near the bottom of the channel earlier in the month, although it didn’t actually go low enough to make a proper retest of it. Since the recovery, the 3-day price of the cryptocurrency has returned to the midway line of the channel, situated at around $0.63. During the last few months, the coin has interacted several times with this line, with the latest instance being last month. Back then, the asset initially found support at the level, but before long, the downtrend resumed and it fell below. With ADA once again retesting this line, it will be interesting to see what trend follows this time. Related Reading: Bitcoin Dominance: BTCs MVRV Outpaces ETHs For Record 812 Days If Cardano ends up losing the line and a decline takes place, then the asset’s next destination could be the $0.54 mark, according to Martinez. Such a drop would mean a decrease of almost 17% from the current spot price. Like the Descending Channel, there is also a pattern in TA known as the Ascending Channel. This one naturally occurs when the consolidation is toward the upside instead. As the analyst has pointed out in another X post, XRP has been trading inside such a channel in the short term. “XRP is trading within an ascending triangle, with key resistance at $2.22,” notes Martinez. “A breakout could spark a move toward $2.40.” ADA Price At the time of writing, Cardano is trading around $0.65, up around 20% in the last week. Featured image from Dall-E, Shutterstock.com, charts from TradingView.com
