Cardano’s native token, ADA, is currently enduring a severe sell-off as markets continue to bleed. The price of the smart contracts blockchain remains in a steep decline, and it appears that the bears could have one more drop in the cards before prices finally reverse.
ADA started the week on a strong note as the crypto asset surged from $0.77 to above $0.90. The rally lost steam mid-week, and ADA pulled back below $0.76.
Analyzing the downtrend, it seems that the decline that started on April 4, set ADA into a falling channel pattern where it made a series of lower highs and lower lows between two parallel lines. On May 3, the stock broke up bullishly from the falling channel only to retreat a day later. This was a sign of strong downside momentum that signaled the continuation of an extended decline.
ADA is currently trading at $0.59, and it looks like the bears are targeting a move to $0.54. Below this level, support is expected at $0.50. On the upside, the immediate resistance is located at $0.65.
The weekly close will be crucial in determining the direction of ADA in the short-term as a close above $0.60 could trigger a move to $0.65. However, a close below $0.54 could mean a pullback to $0.44 price levels, which could be the final capitulation low.
For Cardano to reverse and start uptrending, it must reclaim and close above $0.90. Doing so would invalidate the bearish thesis and could see ADA surge higher towards $0.90 – $1.00.
A move back into this range would also invalidate the immediate bearish pressure seen on the crypto asset since Feb. 2021. The reversal could also open up further upside towards $1.20 over the near-term forecast period.
So again, if the price rebounds from the $0.44, a year from now, ADA’s latest decline will look like a correction within a bigger uptrend.