How Lower Top Formation Puts Cardano Price at Risk of Losing $0.5 Support
Amid a recent upswing in the crypto market, the Cardano price showed a notable reversal from the 100-day EMA slope at $0.57. This positive turnaround uplifted the coin value to 20% within a week to hit a high of $0.683. However, overhead supply at this barrier hints the traders are selling at a bullish swing which promotes the formation of bearish reversal patterns.
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Cardano Price Recovery at Risk as Bearish Setup Looms
Cardano Price| Tradingview
The Cardano coin entered the current correction trend in mid-March when the price reverted from a high of $0.81. The bearish pullback tumbled the altcoin value by nearly 30% to hit a low of $0.569.
While the current market recovery pushed the ADA price to $0.636, the overhead supply at $0.683 barrier hints traders are selling this asset at a bullish swing. The formation of the bearish candle-evening star at resistance indicates a local top developing which may plunge the Cardano price to $0.57 support.
An analysis of daily charts shows downswing will reverse the formation of a reversal chart pattern called the head and shoulder pattern. This bearish setup commonly spotted at the market top suggests a shift in trend control toward sellers, signaling a significant correction may be in progress.
However, the pattern’s validation hinges on ADA’s price dropping below the key neckline support of $0.57. Losing this support will also plunge this altcoin below a long-coming trendline which carried a recovery trend for the past five months.
The post-breakdown fall will prolong the correction trend to $0.46, registering a potential loss of 18%.
On a contrary note, if the buyers defend the rising support trendline, the buyers will have an opportunity to counter and invalidate the bearish thesis.
Technical Indicator:
Relative Strength Index: The RSI slope lowering below the 50% floor indicates the market participants are turning bearish on this asset.
BB Indicator: The downswing in the lower boundary of the Bollinger band indicator indicates the sellers are driving a high momentum downfall.
The post How Lower Top Formation Puts Cardano Price at Risk of Losing $0.5 Support appeared first on CoinGape.
Filed under: News - @ January 1, 1970 12:00 am