Cardano price action slips into a bull trap and could hit $0.40 this week

• Cardano price action tries a bullish breakout above a red descending trend line.
• ADA price fails, however, and falls into a bull trap, tanking 1%.
• Risk to the downside points to $0.40 and possibly a retest of $0.388.

Cardano (ADA) price action has tried to jump above a significant bearish element that has been pushing price action to the downside since September. The break failed, however, as geopolitics took over with Russian missiles hitting Kyiv in retaliation for sabotaging the bridge between Crimea and Russia. With the security council in Russia set to convene, the green light for deployment of nuclear weapons could be imminent and trigger another leg lower across several asset classes.

ADA price depends on outcome of Russian security council

Cardano price action slipped 1% during the European trading session as ADA bulls tried to break above a red descending trend line that it has been trading above since September. With several confirmation tests, the breakout quickly slipped into a bull trap as equities in Asia started to tank after COVID-19 numbers surged, and more lockdowns are forecast for mainland China. This means another risk of supply chain delays leading to higher global inflation, higher interest rates and more downside for risk assets such as cryptos. 

ADA price action is thus set to tank further as the greenback makes small gains on the back of this possible game-changer on Monday. Once $0.417 has been taken out, which was the low of October, expect to see another leg lower towards $0.40. From there, a test of $0.388, the low of January 2021, is not out of the question, printing   fresh two-year lows for the altcoin.

ADA/USD Daily chart

ADA price could alternatively jump higher should US markets be able to turn the tide. That could mean US equities rally higher and shrug off the bearish sentiment from Asia and Europe. In such a scenario, the bull trap could defuse, and bulls might be able to rally towards $0.46 where the monthly pivot and the 55-day Simple Moving Average (SMA) may provide double cap to further gains.