- Cardano price drops 5% in a similar pattern to other cryptocurrencies in the aftermath of disappointing Coinbase earnings.
- ADA price gets underpinned by a double supportive belt.
- The perfect scenario presents itself to buy the dip and enjoy a 30% rally towards the May 31 high.
Cardano price had a setback after briefly touching $0.55 on Monday when it faded following disappointing Coinbase earnings. Although this looks like a cold shower, it holds a golden opportunity to buy into ADA price action as it is underpinned by a double technical belt. There is a chance price action will bounce off one of these levels and skyrocket towards $0.70, returning a 30% increase to portfolios.
ADA price set to jump 30%
Cardano price got caught in the crosshairs of disappointing Coinbase earnings that were the result of the crypto winter hanging over the asset class for most of 2022 thus far. A turnaround, however, looks to be in the making as the 55-day Simple Moving Average (SMA) is flatlining and, together with the monthly pivot at $0.49, underpins price action. With that short fade, the Relative Strength Index (RSI) has cooled off a bit further and is nearing medium levels, ideal for staging a rally unobstructed by the possible drag of underlying technical measures.
ADA price will first need to tackle $0.55 to the upside to break out of the chains of the possible range trade present since the end of July. Once that upper level has been broken, the road is open to head to $0.60 and take out the monthly R1, the R2 at $0.65, from where it is a straight path to $0.70 at the high of February 06, 2021. Do not expect this to be a rally to be printed in just a few days, but look for a time horizon towards the end of August with a few hiccups along the road.
ADA/USD Daily chart
Relying on underpinned price action, however, comes with a big risk that it could break, leaving the road wide open for an extended drop back to the level of January 07, 2021, which already holds significant importance as seen on May 12, 2022, when the falling knife was caught. Such a fall could mount into a 24% loss, and with it the risk that more downside would come into play as clearly a very big bull trap has been formed for investors that jumped on the crypto summer, while it was merely a pause in the crypto winter. More downside would come with new lows for 2022.
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