• Cardano price has penetrated below the weekly support level at $1.20 to collect liquidity.
  • A swift recovery will lead to a 20% gain, propelling ADA to $1.42.
  • A four-hour candlestick close below $1.02 will invalidate the bullish thesis.

Cardano price has been trading below a vital support level for quite some time. The short-term bearish outlook may be setting up a bottom that could reverse the current trend. A recovery above the said barrier will be the key to restarting a quick run higher. 

Cardano price eyes recovery

Cardano price set multiple swing lows around the $1.20 support level on December 4, 2021, leaving behind a plethora of sell-stop liquidity below it. On January 8, ADA sliced through this barrier and collected the untapped liquidity, signaling market maker manipulation.

A quick recovery above $1.20 will be the key to kick-starting a massive uptrend since it is a higher time frame (weekly) support level. Investors can enter long positions at the current market level - $1.18 and await  ADA to move past the $1.20 hurdle. 

The $1.35 resistance level is where traders can start offloading their holdings. Other levels where market participants can scale their profits include $1.39 and $1.42. In some cases, Cardano price could retest the weekly resistance level at $1.46, coinciding with the four-hour supply zone, ranging from $1.46 to $1.52.

ADA/USDT 4-hour chart

ADA/USDT 4-hour chart

For traders that want to minimize their losses, the stop-loss can be placed just below the January 8 swing low at $1.12, yielding a 4RR (risk-to-reward) trade. If not, the stop-loss can be placed comfortably below the $1.02 to $1.19 demand zone’s lower limit. This setup, however, reveals a 1.55RR trade.


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