- Cardano price is down by 8% since tagging the $0.36 price level.
- ADA could decline by 16% but still remain bullish in the long term.
- The uptrend would be deemed void if $0.239 were breached.
Cardano price is witnessing the first signs of a correction following the 55% rally established this winter. This thesis analyzes previous market behavior and technical indicators to forecast a plausible scenario for ADA in the weeks to come.
Cardano price shows potential for more gains
Cardano price saw its strongest red day this year as the smart contract token fell by 7% on January 18. The decline came after three days of consolidation near the $0.35 zone. The 8-day exponential moving average, which served as a support level during a 3-day grapple, eventually gave way and has now acted as resistance on shorter time frames.
Cardano price currently auctions at $0.3385. A Fibonacci retracement tool surrounding the 55% rally shows the current pullback as a shallow 23.6% retracement. Normally after strong impulsive rallies, a corrective decline takes place, bringing the value of an asset down to the 50 or the 61.,8% Fib level. If this is the case, Cardano could fall between 12-16% and still have the potential to rally again. Key bullish targets would be November's swing high at $0.43, resulting in a 28% uptrend move from today’s ADA price.
The bears have yet to breach the ascending trendline, which provided support for ADA during the initial stages of the new uptrend. Additionally, the volume indicator shows fewer transactions during the current selloff than when the price ascended, which suggests investors are refraining from taking profit in hopes of higher targets.
Combining all these factors, the next dip in the ADA price could be a good entry point for sidelined bulls to enter the market. The uptrend potential would be void if the origin point of the rally at $0.239 were breached. If the aforementioned level is breached, the Cardano price could fall into the psychological $0.20 zone, an untagged liquidity level from 2020. The bears would accomplish a 40% decline if successful.
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