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Cardano has mostly moved in lockstep with the king coin since the crypto sell-off on May 19th. The fact that its correlation coefficient with Bitcoin has progressively improved from 0.64 to 0.80 in just two months backs up this claim. This statistic can be a double-edged sword at times, and unfortunately for ADA, its price has suffered as a result of the overall market’s bearishness.
ADA’s price was roughly 60% lower than its all-time high on May 16, with the altcoin selling at $1.04, down 10% in the last 24 hours.
Cardano 4-hour chart
In the long run, ADA’s increased network activity and lined updates support a positive narrative, but its short-term movement remains in doubt. After 16 days after the pattern’s development, a descending channel breakdown occurred. The next target for ADA appeared to be its swing low of $0.998-$0.978 on June 22nd — a zone that was shattered during the stock’s initial collapse in May and again in late June.
Before buyers return to the market, ADA may be able to limit its losses within this zone during the following few sessions.
The Relative Strength Index was trading in the oversold zone, which typically signals a price reversal. The forecast reversal can be expected to be transient rather than a trend reversal because the overall market structure was still bearish. The Directional Movement Index’s -DI, which gained ground on the +DI and pointed to a rising bearish trend, corroborated this.
The ADX was 38, indicating that the market was extremely directional and that the possibilities of a prolonged decline were considerable. According to On Balance Volume, ADA experienced a brief period of moderate rise between July 9 and 12, but since then, selling pressure has ruled the market.
According to ADA’s indicators, there was a likelihood of a longer slide towards the defensive zone of $0.998-$0.978. The market’s bulls, on the other hand, may try to crush incoming losses within this zone, which could lead to a brief rally over the next 24 hours.
Traders should take long positions in ADA when it approaches this support zone, exiting at $1.086 — a 9 percent -10 percent gain. However, a lengthy slide appeared to be possible, and traders with a high risk appetite should only long ADA.