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The Cardano (ADA) price broke down from a short-term ascending support line, a sign that the previous upward trend has ended.
The price could approach its yearly low if the downward movement continues. However, there are no imminent signs that ADA will fall to a new yearly low.
Cardano Price Fails to Sustain Breakout
The technical analysis on the daily time frame indicates a bearish outlook for ADA’s price for several reasons.
Firstly, ADA recently broke out of a short-term descending resistance line that had been in place since April 13. This breakout is a strong and clear bullish signal, indicating the end of the bearish trend and the start of a new bullish trend.
However, ADA failed to sustain its increase and was rejected by the $0.36 area (red icon). This catalyzed a decrease that took the price back to its pre-breakout levels.
Additionally, the daily Relative Strength Index (RSI) provides a bearish reading. The RSI is a momentum indicator used by traders to assess whether a market is overbought or oversold and to make decisions about accumulating or selling an asset.
Currently, the RSI reading is below 50 and trending downwards (red circle), indicating that the trend is bearish.
However, it is worth mentioning that Cardano’s founder Charles Hoskinson announced a network upgrade that will greatly increase the speed and efficiency of the Cardano blockchain.
ADA Price Prediction: Short-Term Breakdown Accelerates Price Drop
Examining the shorter-term six-hour timeframe gives a bearish reading.
To begin with, the Elliott Wave count indicates the completion of an A-B-C corrective structure (black). As this correction is upward-facing, it suggests a probable bearish trend. Technical analysts utilize the Elliott Wave theory to identify recurring long-term price patterns and investor psychology, aiding them in determining the trend’s direction.
This was confirmed when the ADA price breached the short-term ascending support line on July 31. This is a sign that the previous increase of 72% has ended and a new decrease has begun.
Moreover, the six-hour Relative Strength Index (RSI) is bearish, since it is below 50 and decreasing.
Despite this bearish short-term ADA price prediction, a potential reversal could take the price back to the ascending support line at $0.33. In that case, the line will be expected to provide resistance.
For BeInCrypto’s latest crypto market analysis, click here.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.
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