Cardano (ADA) Price Due For Short-Term Drop

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Cardano (ADA) price is trading inside a bearish pattern, from which a breakdown is the most likely scenario. Afterward, the long-term upward movement is expected to continue.

ADA is the native token of the Cardano blockchain, a smart contract platform which uses a proof-of-stake (PoS) consensus mechanism. The blockchain platform released the overcollateralized stablecoin Djed last week. However, the stablecoin immediately lost its peg to the U.S. dollar, reigniting the debate about the viability of algorithmic stablecoins.

Cardano Regains Long-Term Levels

Since its 2022 low of $0.239, the Cardano price created four successive weekly bullish candlesticks. The streak ended last week with a bearish one. Despite this, the price action gives a bullish sign by moving above the $0.370 horizontal area. The area is crucial since it had acted as resistance numerous times (red icons), before turning to support in Oct. 2022. So, its reclaim is a massively bullish sign.

Next, the ADA price broke out from a descending resistance line that had been in place since the all-time high price. At the time of the breakout, the line had been in place for 497 days. This is another sign that a bullish reversal has begun.

Finally, the weekly RSI also broke out from its bearish divergence trend line, which had been in place since the beginning of 2021.

So, three decisive signs suggest the Cardano price has begun a bullish reversal. If the increase continues, the next resistance would be at $0.580.

On the other hand, a weekly close below the resistance line would invalidate this ADA price forecast. In this case, the price could fall to the next support at an average price of $0.160.

ADA/USD Weekly Chart. Source: TradingView

Cardano Price Starting at Short-Term Drop

Despite the bullish outlook from the weekly time frame, the short-term technical analysis provides a more bearish outlook. There are also several reasons for this. Firstly, the ADA price has traded inside an ascending wedge since Jan. 14. The wedge is considered a bearish pattern, meaning that it leads to breakdowns most of the time. 

Secondly, the price has completed a five-wave upward movement, in which the fifth wave was an ending diagonal. 

Finally, there is a bearish divergence in the RSI, which supports the possibility of a drop, which would be confirmed by a close below the wedge. This could occur in the next 24 hours.

Therefore, the most likely scenario is a drop toward the $0.327-$0.348 support area. The area is created by the 0.382-0.5 Fib retracement support levels. However, as long as the price does not reach decisive weekly closes below this level, the long-term upward movement would still remain intact.

On the other hand, breaking out from the wedge would invalidate this bearish ADA price forecast. In that case, the price could increase to the previously outlined $0.580 resistance area.

Cardano (ADA) Price Wedge
ADA/USD Six-Hour Chart. Source: TradingView

To conclude, the long-term Cardano price prediction is bullish, but the short-term one is bearish. Therefore, an initial drop toward $0.327-$0.348 area is expected before continuation. A breakout from the current bearish pattern would invalidate this bearish forecast and lead ADA toward $0.58.

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Disclaimer

BeInCrypto strives to provide accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. You comply and understand that you should use any of this information at your own risk. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.



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