- Cardano price delivers a false bullish signal with price action underpinned at $0.415.
- ADA Price sees the 55-day Simple Moving Average coming in as a trend line from the topside.
- A bearish triangle could be in play with the possible outcome to the downside, a drop to $0.075.
Cardano (ADA) price could be in the making of a catastrophic mistake as bulls are jumping on the false sense of safety that price action is underpinned by the pivotal historical level at $0.415. Traders could be so focused on buying the dip that they forget that the 55-day Simple Moving Average (SMA) is coming in from the top and has already capped the price action from previous weeks. This completion of this formation will result in a break to the downside below $0.415 and open up a massive area that will hold over 80% of losses in case of ADA price tanks in search of the next pivotal support that only comes in at $0.075.
ADA price to be handled with care
Cardano price is signaling a wrong message to cryptocurrency traders this week as most jump, preparing for a bullish move as ADA price action looks to be underpinned at $0.415. However, risk comes from the top side, where the 55-day SMA is dropping sharply, has already capped the topside from the previous two weeks, and is set to do that again this week. With that price pressure further building to the downside, it is just a matter of time before pressure against the bulls who bought at $0.415 and higher becomes intolerable.
ADA price could thus be set for a bearish triangle with $0.415 as the base and following the 55-day SMA as a tilted trend line that forms the descending base of the triangle. Pressure will build and inevitably break below $0.415. Below a big area opens up where losses could amount to an additional 85% of losses, and ADA Price dips below $0.1 to $0.075.
ADA/USD weekly chart
A knee-jerk reaction could be in the cards if the bulls keep their act together and withstand a squeeze against that $0.415 level. If next week the trading week can kick off with a weaker dollar, more room for the upside could be created, and bulls could get the chance to pierce through the 55-day SMA and break it down as a bearish cap. A full completion would result in a swing trade with price action in ADA rallying to $0.715.
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.