Cardano could more than double if ADA holds support

• Cardano price could trap a number of short-sellers anticipating a major price collapse.
• Extremely oversold on the weekly chart with historical lows in some oscillators.
• Downside risks remain the most likely to occur.

Cardano price continues to trade lower but has trade opportunities on both sides of the market. A breakdown below the current support level may only yield a short-term price collapse before a massive rally begins.

Cardano price faces a major uphill battle but is better positioned than most for a surprise rally

Cardano price has a possible long entry on its weekly chart. The theoretical long entry is a buy stop at $1.33, a stop loss at $1.20, and a profit target at $3.00. Cardano must close at or slightly above the $1.33 entry level for the entry to be valid.

ADA/USD Weekly Ichimoku Chart

If the entry level triggers, it would be a very significant bullish event because that would position Cardano price above the 38.2 Fibonacci retracement, the top of the Cloud (Senkou Span A), and the 2021 Volume Point Of Control. Factors contributing to this theoretical long entry are the Relative Strength Index (RSI) near the first oversold level at 30 and the Composite Index at historical lows.

On the short side of the market, Cardano price has a hypothetical entry on its daily chart with a sell stop order at $1.19, a stop loss at $1.25, and a profit target at $1.00. The entry can only occur if there is a daily close at or slightly below the $1.19 price level. The short entry is based primarily on the head-and-shoulders pattern present on the Composite Index.

ADA/USD Daily Ichimoku Chart

Cardano price action is in a mixed situation when developing a clear directional bias. The trend on the daily chart is clearly bearish, but shows signs of exhaustion. On the other hand, the weekly chart is clearly bullish but is showing signs of converting into a bear market. One thing that is consistent on the daily chart is the shared support zone of 30 in the RSI and one other oscillator on each time frame showing extreme oversold conditions.

 

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