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Cardano (ADA) has dropped significantly over the past few days. The correction resulted in a price reduction of 22.6%.
- The price of ADA could lose another 14% in the coming days
- Cardano buyers are finding support at the 20-day EMA
- Intraday trading volume is up 104.6%.
Extended selling activity results in a breakdown of the critical support EMAs that attempt to breach the $0.45 support zone. This allows buyers to take advantage of the price reductions.
Cardano shows a bullish reversal
ADA/USD price is showing a bullish reversal starting from $0.4 and forming a rising channel pattern with a price peak of 47.5%. However, at the time of writing, the price of Cardano is showing bearish movement as it is trading at $0.4551 or down 3.07% according to CoinMarketCap.
On the daily chart, the price of ADA is showing a triple black peak pattern formation. This shows a significant struggle to protect at the $0.45 support.
The increased selling pressure is evident with the sudden rise in intraday trading volume and the appearance of long wick candles.
The continued decline on the daily chart is increasing the possibility of Cardano going down or breaking below the key support zone of $0.45.
Against this backdrop, there may be an opportunity to short a break below the key support zone and a possible 14% drop to the July low of $0.4.
ADA price is still bearish
On the other hand, if there is a rejection in price in line with the bullish reversal at the $0.45 support zone, it could trigger a price rally that trades above the 50-day EMA.
For example, the RSI for ADA shows a significant increase in bearish character when it breaks below the 14-day half-value line or moving average line.
A few days ago, ADA successfully issued this false breakout that caused confusion among market participants. Analysts noted that the price of ADA rose to $0.55 and then fell below the line within a few days. That meant a weekly loss of 12.9%. With these numbers, ADA will fall below this mark especially in August.
The overall outlook for Cardano remains extremely bearish. MACD signals also indicate that the price of ADA could revisit its mid-July lows with the ongoing correction.
Text credit: Newsbtc
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