As Bitcoin trended lower on Tuesday, most altcoins also followed it due to their strong correlation. Despite several tries to ward off the bears, the Cardano market got pushed down to the $1.08 price level yesterday. Although the market was now in recovery mode, bearish volatility still ruled the market.
Cardano 12-hour chart
Source: ADAUSD on TradingView
The above chart noted that ADA had dropped 48% from its peak of $2.47 to $1.27. Yesterday’s losses pushed ADA down to its support at $1.08. The digital asset previously tested this level in April and noted a period of consolidation at this level.
Could ADA once again undergo consolidation? The chances were high.
Reasoning
The current market was being driven by high volatility. Bearish or bullish, the market has been oscillating between immediate highs and lows. The current low has pushed the price of ADA under the 50 Moving Average and strengthened the bearish trend.
Even though the price was retracing, Fibonacci retracement tool noted the price testing resistance at the 23.60% level. If the price manages to push past this level, traders may hold on to the $1.27 value. This could lead to a consolidation of ADA value between $1.27 and $1.50. A rising buying pressure could help the price surpass this immediate resistance.
Relative Strength Index was noting ADA’s return from the oversold zone. The indicator hit a value of 42, which was close to equilibrium suggesting the market was trying to achieve stability. This was also hinted at by the convergence of Directional Movement Index. The -DI, which remained above the +DI, was now converging. This meant that despite a dominant downward pressure, the introduction of buyers has relieved some stress in the market. However, this was not enough for a trend reversal.
Conclusion
Cardano may continue to recover from yesterday’s fall. As the price tested resistance at $1.27, we may witness the price moving sideways to gain stable ground for a trend change. As bearishness remained high, traders may want to practice caution in the market.
