Disclaimer: The findings of the following article are the sole opinions of the writer and should not be taken as investment advice
Cardano and Nervos are going to enable interoperability across their platforms within the next six weeks, as per the Cardano team. The crypto-project has been taking great strides in its development of late as a decentralized project and this growth was reflected in the appreciating value of ADA.
Cardano 12-hour chart
Source: ADAUSD on TradingView
Cardano’s price broke out of the ascending triangle pattern and hit $1.89. At press time, it was trading at $1.81 and was heading lower. This could be the price retracing after a strong surge on the charts.
ADA’s retracing price faced a potential 6% drop if the market conditions are met.
Reasoning
A period of high volatility in Cardano’s market resulted in wild price action. With volatility on the rise, the downtrend could escalate. The 50 moving average acting as support could be tested and if the price fails to bounce back, it may slip to $1.70.
ADA’s rising price was only momentary and the ADX suggested that it was not a strong trend to sustain. However, for a trend change to take place, the ADX’s value may have to rise to 25. Meanwhile, the Stochastic RSI was picturing a trend reversal as the RSI and Signal lines were crossing over. The RSI was dropping under the Signal line in the overbought zone. This pointed to instability in the market as the price headed south.
Crucial levels to watch out for
Entry-level: $1.79
Take profit: $1.69
Stop-level: $1.88
Risk and Reward: 1.27
Conclusion
ADA broke out of the bullish trend that sent its price to $1.89. However, the press time market was not supporting this high price and the value of the asset seemed to be dropping. If the value surpasses the MA, a downtrend will be definite and ADA will move towards $1.70. With trading volume remaining low and bullish sentiments not receiving enough support, the chances of a drop in price were gaining momentum.
