The Cardano price failed to follow through with a bullish trend breakout despite a surging crypto market over the last four days. Considering Bitcoin (BTC) came close to tagging $50k yesterday, Cardano’s (ADA) performance has been underwhelming. This morning, ADA is changing hands at $2.180, around 40% below the September high of $3.101. Furthermore, after unsuccessfully attempting to break higher, Cardano is vulnerable to breaking down.
Cardano followed the broader market rally higher over the weekend, improving 15% from Thursday’s $2.020 low to $2.320 on Saturday. As a result, ADA hurdled crucial trend line resistance at $2.310. Unfortunately, the Cardano price finished the day at $2.247, beneath the trend line, signalling a false breakout. On Sunday, ADA again attempted to clear the trend before failing and reinforcing the trend’s importance. As a result, Cardano could be heading back to a test of significant trend support.
ADA price Analysis
The daily chart shows two clear trend lines that have dictated the price action since July. The first, a rising trend line from the July $1.020 low, offers support at $2.100. The second, a descending trend line from the September all-time high, caps the Cardano price at $2.220. The inability to clear the descending trend line is frustrating for the bulls, and unless ADA punches through in the next day or two, it’s in danger of losing the rising trend support. However, successful clearance of $2.220 sets Cardano up for an extension towards $3.000.
If ADA drops below $2.100 on a closing basis, I expect the price to extend lower. A logical target is $1.500, which was previously resistant in July and the starting point of the bullish run in August. However, considering the large buying ahead of the Alonzo upgrade in September, an argument can be made for a much steeper decline. If the crypto market turns lower, the Cardano price could drop back towards the July lows around $1.000. I predict ADA is more vulnerable than most because buyers increased exposure towards the top of the range in anticipation the upgrade would send the Cardano price materially higher. However, since the successful transition, ADA has been trending lower. As a result, the market feels heavy, and if it starts to break down could force newly minted longs to liquidate, exaggerating the selloff.
Cardano Price Chart (Daily)
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