Cardano’s cryptocurrency ADA (ADA/USD) has been in a bear-trend since early November, a trend that was reinforced last weekend amid a broad sell-off in cryptocurrency markets. Since the 9th November high at $2.3746, ADA has tumbled more than 40% and to current levels just to the south of the $1.40 mark.
ADA/USD has been moving lower within the confines of a bearish trend channel, with the cryptocurrency also showing a pattern of breaking below a key level of support, retesting it from the downside and then being pushed lower. Notably, ADA’s approach towards its 21-day moving average last Friday was also seemingly used by the medium-term bears as an entry point to load up on shorts.
Some Short-Term Positives?
The selling pressure was most severe last Friday and Saturday when ADA tanked from the $1.80s to print its lowest level since July just under $1.20. But with the cryptocurrency testing the lower bounds of its current descending trend channel, dip buyers have since come in to support the price action.
Indeed, ADA has shown some resilience this week, and at current levels near $1.40, trades some 15% above last weekend’s lows. Short-term momentum signals have turned a little more positive as a result.
On the four-hour candles sticks, the 12-period exponential moving average (EMA) moved above the 26-period EMA on Monday, sending the short-term MACD into positive territory, which was taken as a short-term buying opportunity at the time. Meanwhile, the 14-period RSI, which dipped as low as 26.15 during the weekend but has since recovered back to around 46.50, also acted as a good indicator of a near-term bottom.
Prices appear to be in the process of forming a short-term ascending triangle, which is often followed by a bullish breakout. Such as break could see ADA move back above $1.50 in the near term.
Longer-term Outlook More Downbeat
Despite the short-term technicals looking upbeat, the medium-term technical are not looking so good for ADA. The aforementioned descending trend channel that has been suppressing the price action since November is likely to offer significant resistance in the $1.50s. The 21DMA sits at $1.62.
Meanwhile, it appears that ADA is on the verge of seeing the formation of a “death cross” – the 50DMA (currently at $1.8871) slipping below the 200DMA (currently at $1.8593). Many technicians would take this as a medium-term bearish signal.
Should the short-term ADA bulls fail to push the cryptocurrency back above $1.50, or force an upside break of the recent downtrend, the ADA is likely to continue to decline over the coming weeks. Longer-term bears may well be targetting a test of a triple bottom in the $1.0 area from earlier this year.
This article was originally posted on FX Empire