Cardano price compression brings false sense of calm, as a sharp decline awaits
- Cardano price may close with the fourth Doji pattern in the last five weeks.
- A steady balance between market timers and long-term holders fills chart with contradictions.
- ADA needs institutional investor commitment to overcome 2018 high.
Cardano price is poised for a meaningful decline in the coming weeks in light of the price compression and significant overhead resistance.
Cardano price contradictions demand a willingness to make difficult investment decisions
ADA consolidated the rapid advance in 2021 in a textbook symmetrical triangle during February and March. It was activated last week but failed for the fourth time to hold a breakout above the 2018 high at $1.40. The failures above the all-time high of 2018 emphatically show long-term holders are using the level to liquidate positions.
Multiple failures in one direction more often than not result in sharp moves in the opposite direction, and that is the outlook for ADA. Speculators using a “buy the dip” investment approach this past weekend are going to be burned.
The first level of support for a decline is the confluence of the 38.2% Fibonacci retracement of the February rally at $0.94 with the March low at $0.95. Subsequent support is the 50% retracement at $0.81, yielding a 36% loss from the current price. If the losses rapidly accumulate, there is the potential to test the 61.8% retracement at $0.69.
ADA/USD weekly chart
To negate the bearish thesis, ADA needs to close above last week’s high at $1.57. It would signify that the previous overhead resistance has been overcome, and the altcoin is ready to leave the 2018 high behind. The 161.8% extension of the March correction is the first upside target at $2.08.
Author
Sheldon McIntyre, CMT
Independent Analyst
Sheldon has 24 years of investment experience holding various positions in companies based in the United States and Chile. His core competencies include BRIC and G-10 equity markets, swing and position trading and technical analysis.
