Why Cardano price is at risk of a 17% sell-off

Cardano (ADA) price is under the scrutiny of bears after a firm technical rejection over the weekend. Not once but twice bulls got cut short by the 55-day Simple Moving Average (SMA) around $0.96, making it a firm rejection on Saturday followed by a long squeeze on Sunday, trapping bulls and pushing them against the $0.9150 level. Although bulls were able to close above the level on Monday, the price is set to drop again for a retest of the level, making it the fourth test in just two weeks – and setting the scene for a massive drop as the Relative Strength Index (RSI) sees no sign of bulls being present on the demand-side to drive price higher.

ADA price sees technical indicator flashing and pointing to a bearish wave

Cardano price is issuing a distress signal to the markets after bears came in heavy and hard over the weekend, performing a coupon Cardano price action. With a 5% loss over the weekend, bulls are being pushed against the wall at $0.9150. On Monday, stops were run, and new bulls came in to defend the gains from the beginning of March, but their efforts look to be no more than a drop on a hot plate. As overall volume returns to markets after the bank holiday, ADA has lost 1% during the ASIA PAC and is set to lose even more going forward. 

ADA price will soon drop back to the already-mentioned $0.9150, making it the fourth test and possibly even break further to the downside. Expect to see that drop look for support around the monthly S1 at $0.8650, with tail risks broadening and weighing on global investor sentiment, and a drop further towards $0.7790 also possibly on the cards. That level is a significant floor formed at the beginning of March and, by then, the RSI will be trading in ‘oversold’ and will see profit-taking among bears.

ADA/USD  daily chart

However, investors need not despair as once a few tail risks fade, expect some room to open up driven by a turn in positive sentiment. This could lead ADA price to punch through $0.968 and leap to $1.00. That would trigger a return of more investors back into Cardano price, since bulls will have clearly gained control from bears. Should the dollar back down a bit further with that fading tail risk, expect to see ADA price trading further above $1.00.