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.
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.