2021-05-11 10:00:00

ADA gains to diminish as 16% correction awaits

  • Cardano price shows signs of exhaustion on bullish momentum after surging 45% in less than five days.
  • The sellers could trigger a 10% downtrend in ADA toward the resistance level at $1.47.
  • Breakdown of $1.22 support floor will indicate a bearish onslaught and purge any chances of an uptrend.

Cardano price is on the precipice of starting a downtrend after a recent minor sell-off. ADA looks to slide toward a key demand barrier that separates bullish from bearish.

Cardano price reverts to mean

On the 12-hour chart, Cardano price reveals a 14% decline caused by a sudden but minor market crash across the cryptocurrency market. As for the so-called “Ethereum killer,” there is a high likelihood that this retracement will continue since there is no precise support level.

Cardano price will retrace 10% from its current position to encounter the support barrier at $1.478. This support barrier prevented ADA from breaking out for more than two months starting from late February.

However, the recent 45% upswing that kickstarted on May 5 sliced through this crucial barrier. Therefore, a breakdown of the $1.478 floor will signify a short-term spike in selling pressure and signal a continuation of the downtrend.

In that case, Cardano price will move to test the 50 and the 100 Simple Moving Averages (SMA) at $1.367 and $1.294. Interestingly, these SMAs are present inside a demand zone that extends from $1.255 to $1.367, making this area pivotal.

Hence, investors need to note that ADA bulls could make a comeback in this zone.

ADA/USDT 12-hour chart

While the correction explained above is not bearish per se, it provides bulls with an opportunity to reopen their long positions. However, if Cardano price produces a decisive close above $1.85, it will invalidate the short-term bearish scenario. If the buying pressure persists, it will allow ADA bulls to continue the uptrend toward $2.

Moreover, the breach of the demand zone stretching from $1.255 to $1.367 will represent the inability of the buyers to make a comeback and invalidate the idea of an uptrend.

Under these conditions, investors should expect a bearish continuation of Cardano price toward the 200 SMA at $1.139. A breakdown of this barrier could lead to a 9% retracement to $1.033.

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