- Cardano price is forming a rising wedge pattern, hinting at a 16% drop.
- The pullback might be cut short due to the demand zone extending from $1.488 to $1.566.
- A decisive 4-hour candlestick close above $1.852 will invalidate the bearish outlook.
Cardano price shows the formation of a setup that hints at a breakdown. The resistance level present above the current position adds credence to this drop.
Cardano price on the verge of a downswing
Cardano price has been setting up higher highs and higher lows since May 28. A rising wedge pattern appears to form when these swing points are connected using trend lines. Such a converging price action for ADA tends to result in a violent drop after a decisive close below the lower trend.
As such, the technical formation forecasts a 16% downswing, obtained by measuring the distance between the first swing high and low. Adding this measure to the breakout point at $1.725 places Cardano price at $1.448.
While a 16% correction seems plausible from a theoretical perspective, the presence of the demand zone, ranging from $1.488 to $1.566, might stunt this drop.
Hence, investors can expect a 10% drop to $1.566 or a sweep into this zone. Only in extremely bearish scenarios, ADA price might break below the said support area and head toward the theoretical target point at $1.448
ADA/USD 4-hour chart
While the bearish descent seems to be fixed due to a rising wedge, investors should note that this pattern is formed on an uptrend. Therefore, a sudden spike in potential buying pressure could tilt the odds in the bulls’ favor.
The stiff resistance level at $1.833 has prevented Cardano price from moving higher for nearly two weeks. Hence, a decisive close above $1.852 will invalidate the bearish narrative detailed above and kick-start a bullish outlook.
In this case, ADA price might rally 10% to tag the resistance level at $2.037.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
IRS says crypto staking should be taxed in response to lawsuit
The IRS stated that rewards from cryptocurrency staking are taxable upon receipt, according to a Bloomberg report on Monday, which stated the agency rejected a legal argument that sought to delay taxation until such rewards are sold or exchanged.
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode
Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.
Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses
Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.
Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery
The global cryptocurrency market cap shrank by $500 billion after the Federal Reserve's hawkish statements on December 17. Amid the market crash, Bitcoin price declined 7.2% last week, recording its first weekly timeframe loss since Donald Trump’s re-election.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.