Cardano Price Analysis: ADA Drops Below Bullish Breaker After Predicted Correction
Cardano (ADA) is one of the most popular cryptocurrencies in the market, ranking seventh by market capitalization. The project aims to create a scalable, sustainable, and interoperable platform for smart contracts and decentralized applications (dApps). Cardano is currently in the Goguen era, which focuses on delivering smart contract functionality and native token support.
In this article, we will provide a Cardano price analysis based on technical indicators and recent news. We will also look at the possible scenarios for ADA in the short and long term.
Cardano Price Overview: ADA Breaks Down From Head and Shoulders Pattern
Cardano price has been following a downtrend since reaching its all-time high of $3.09 on September 1, 2022. The coin formed a head and shoulders pattern on the daily chart, which is a bearish reversal pattern that indicates a potential change in trend.
The head and shoulders pattern consists of three peaks, with the middle one being the highest (the head) and the other two being lower and roughly equal (the shoulders). The pattern is confirmed when the price breaks below the neckline, which is the support level that connects the lows of the two shoulders.
On May 7, 2023, Cardano price broke below the neckline of the head and shoulders pattern at $0.377, signaling a bearish continuation. The breakdown was accompanied by a significant increase in volume, which adds validity to the pattern.
The target of the head and shoulders pattern is calculated by measuring the distance from the head to the neckline and projecting it from the breakdown point. In this case, the target is around $0.27, which is about 24% lower than the neckline.
Cardano Price Prediction: ADA Finds Support at Bullish Breaker
However, Cardano price did not fall straight to the target of the head and shoulders pattern. Instead, it found some support at a bullish breaker zone, which is an area that was previously a resistance and flipped into a support.
The bullish breaker zone for ADA extends from $0.348 to $0.361, which coincides with the 0.786 Fibonacci retracement level of the previous upward move from $0.31 to $0.385. This zone was also mentioned in our previous publication as a possible area for a local bottom.
On May 11, 2023, Cardano price bounced from the bullish breaker zone and reached a high of $0.372. However, the bounce was short-lived and met resistance at the downsloping trendline that connects the lower highs of ADA since September 2022.
As of writing this article, Cardano price is trading at $0.342, below both the bullish breaker zone and the downsloping trendline. This indicates that the bears are still in control and that ADA could resume its downtrend towards the target of the head and shoulders pattern at $0.27.
Cardano Price Forecast: ADA Could Recover If It Breaks Above Key Resistance Levels
On the other hand, if Cardano price manages to break above the downsloping trendline and reclaim the bullish breaker zone as support, it could invalidate the head and shoulders pattern and signal a possible trend reversal.
In that case, ADA could face resistance at $0.385, which is the previous local high and the 0.382 Fibonacci retracement level of the downward move from $3.09 to $0.31. A break above this level could open the doors for more gains towards $0.45, which is the 0.5 Fibonacci retracement level and a horizontal resistance.
The next major resistance for ADA would be at $0.54, which is the 0.618 Fibonacci retracement level and another horizontal resistance. A break above this level could confirm a bullish reversal and pave the way for a retest of the all-time high at $3.09.