Cardano (ADA) is retesting Q1's low. Will the support hold or will it continue to form lower lows? Read more to find out!
Cardano (ADA), had an incredible run from 2020 through 2021. However, 2022 is not looking good for the proof-of-stake coin. Since setting a new all-time high in September, the price has been creating lower highs and lower lows. Initially, Cardano was set out to allow change-makers, innovators, and visionaries to bring change to the blockchain space. Cardano's DeFi and NFTs ecosystem are still relatively new when compared to Ethereum's and Solana's.
Cardano is beginning to introduce live products to its ecosystem. Some of their most popular decentralized exchanges are SundaeSwap and ADASwap. The ADA ecosystem also supports wallets, marketplaces, infrastructure, launchpads, and more. In 2020, most of these dApps were still being built or on a test. It wasn't until 2021 that users could finally take advantage of ADA's low transaction cost and speed. Today, there are over 100 decentralized apps built on top of Cardano.
In this article, you'll see multiple time frames for ADA.
At the time of this writing, ADA is ranked the 8th largest cryptocurrency, according to CoinMarketCap. Its market cap is sitting around $27.4 billion.
One of ADA's most recent updates, Alonzo, brings programmability to the network. This allows the network to grow from static to dynamic. Cardano claims the Alonzo update puts it in the same class as Ethereum because it now supports smart contracts. Does price action reflect the ecosystem growth? Let's take a look at the charts!
ADA/USDT on a Monthly Chart
Using the logarithmic chart, we get a clear long-term picture.
Looking at the monthly time frame, we can see that the long-term trend remains in favor of the bulls. ADA is now testing the local bottom, with the potential for a reversal.
At the left side of the chart, ADA seems to be in a strong uptrend since the beginning of 2020. Higher highs and higher lows have been formed until September 2021. ADA has seen some incredible growth these last two years. A cool-off period is nothing out of the ordinary, and is most expected when things go parabolic in crypto. The bears have been in control since we saw the price action set a new all-time high in September.
Looking at today's price action, it is clear that the token is currently sitting at around the 23.6% Fibonacci retracement. A bounce off of this level will confirm that this bull trend is not over yet. However, if bulls lose the long-term trend we could see the price continue selling off to its next major support. The bulls need to confirm the support at this level or expect a bigger sell-off. A look at the lower time frames can give us a better understanding.
Let's take a closer look!
ADA/USDT on a Weekly Chart
Sticking with our logarithmic chart, now we are looking at the pattern time frame. Here we get a different perspective.
The last time the price was at this level, we continued to push to the upside from an impulse break in December. On the left side of the chart, there is no major support level visible above $0.35. Let's look at a couple more details.
Looking at our most recent price action, we can see the price printing lower highs and lower lows. Recently, it failed to hold support around $1. Price action then continued to sell-off and then tried to climb back above support but failed. ADA is now looking for support and attempting to establish a lower low. Without any confirmation of support, this may take a couple of weeks. However, we do see some early signs that bulls are present. The bulls need to step it up here or lose a critical level.
A rejection from the major resistance shown will push ADA below $0.80, a level we have not seen since February 2021. However, a close above resistance and expect the price to continue climbing towards $1.50.
ADA/USDT on a Daily Chart
We are shifting down to the daily time frame and using the logarithmic chart. This time frame is used for timing trades.
Here we get a better picture of the price respecting a bearish parallel channel. You can see a rejection at $1.00, printing a low. The price continued to sell-off.
Today, price action is testing the channel for dynamic support. The bulls need to regain control above $0.85 to show their presence.
Waiting for confirmation of direction before pulling any triggers. For now, the bears are in control. However, a bounce from this level can quickly turn things around.
ADA/BTC on a Monthly Chart
Last but of course not least, is ADA compared to BTC using the logarithmic chart. Price action has printed a double-top.
The price has recently been rejected from closing the above support. Since then it has been selling-off into support levels.
The last time the token’s price was rejected at this level, it started a new trend. Right now, it is getting deep into support now and the bulls need to show up or lose this battle. This is a major level for both bulls and bears. A break and close below this support will send ADA to a new local bottom. A bounce from this level will trigger the price to look for a new local top. This could take some time because of market conditions and geopolitical events.
Summarizing the Above
- ADA on the monthly time frame shows that the long-term trend remains in favor of the bulls.
- ADA on the weekly time frame shows no confirmation of support.
- ADA on the daily time frame shows that the bulls need to regain control above $0.85.
- ADA on the BTC monthly time frame shows a break and close below this support will send ADA to a new local bottom.
Remember that this is all based on the subjective views of the writer. As always do your own research.
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