The Cardano (ADA) price has been trading in a corrective pattern since reaching its 2023 high on December 14. It failed to break out on January 11 and has been falling since. Let’s analyze the charts to see if the price will break out or continue to decline.
Cardano Retraces After Breakout
Looking at the daily time frame, ADA has been trading within an ascending parallel channel since June 2023. After multiple failed breakout attempts, the price finally broke above the channel’s resistance trend line in December and experienced a parabolic increase. This breakout led to a new yearly high of $0.68 on December 14. However, ADA has fallen significantly since then, with two long upper wicks indicating selling pressure.
The daily RSI also gives a bearish reading, as it is below 50 and falling. This suggests a bearish trend for ADA.
ADA Price Prediction: Will There Be More Downside?
Similarly, the six-hour time frame does not provide a clear direction for the trend. ADA has been trading within a descending parallel channel since December 14, which typically indicates corrective movements. On January 8, ADA bounced off the channel’s support trend line and validated the 0.5 Fib retracement support level at $0.46. However, it failed to break out from the channel and was rejected on January 11. Currently, it trades below the channel’s midline, and the six-hour RSI is below 50.
The resolution of the channel pattern will determine ADA’s future trend.
An ADA breakout could result in a 30% increase to the 2023 high near $0.70, while a breakdown from the channel could trigger a 25% drop to the closest support at $0.37.
Hot Take: What Lies Ahead for Cardano (ADA)?
The Cardano (ADA) price has been consolidating within a corrective pattern after reaching its 2023 high. The breakout from the ascending parallel channel led to a new yearly high, but the price has since retraced and is now trading within a descending parallel channel. The RSI readings on both the daily and six-hour time frames suggest a bearish trend for ADA. The resolution of the channel pattern will determine whether the price breaks out or continues to decline. A breakout could result in a significant increase, while a breakdown could lead to a notable drop in price. Keep an eye on the charts for further insights into ADA’s future direction.
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