• 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.

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.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Weekly Forecast: If bulls are back, this is where you can accumulate BTC next

Bitcoin Weekly Forecast: If bulls are back, this is where you can accumulate BTC next

Bitcoin price shows a lack of momentum after an explosive move in the last three weeks. The fourth week has been relatively silent, without a lot of volatile moves.

More Bitcoin News

Ethereum Classic Price Forecast: Do not count on large recovery for ETC in Q1, Q2 of 2023

Ethereum Classic Price Forecast: Do not count on large recovery for ETC in Q1, Q2 of 2023

Ethereum Classic (ETC) saw the headwinds that triggered the massive sell-off of 2022 fade a bit to the background in the first weeks of 2023. That resulted in bulls returning to life after a hibernation of almost five consecutive straight months.

More Ethereum Classic News

Ripple will win the legal battle with US SEC in the Supreme Court: John Deaton

Ripple will win the legal battle with US SEC in the Supreme Court: John Deaton

Ripple, the cross-border remittance giant is likely to win its legal battle against US financial regulator, the Securities and Exchange Commission (SEC) according to crypto proponent John Deaton.

More Ripple News

The real reason why Shiba Inu diamond hands refuse to sell despite 40.6% SHIB price rally

The real reason why Shiba Inu diamond hands refuse to sell despite 40.6% SHIB price rally

Shiba Inu holders who acquired SHIB more than 11 months ago are holding onto their tokens. These holders have refrained from selling their SHIB holdings since December 2021.

More Shiba Inu News

Bitcoin: If bulls are back, this is where you can accumulate BTC next

Bitcoin: If bulls are back, this is where you can accumulate BTC next

Bitcoin price shows a lack of momentum after an explosive move in the last three weeks. The fourth week has been relatively silent, without a lot of volatile moves. While BTC consolidates, other altcoins are rallying left and right, providing massive gains.

Read full analysis

BTC

ETH

XRP