Cardano consolidates around a key support area but has faced severe selling pressure from a decisive resistance level above.
Attempts to reclaim this supply zone have proved abortive, with the support below keeping momentum alive. This consolidation may continue until Cardano prevails over the stronghold resistance, paving the path for higher prices.
Key Points
- Cardano consolidates around a key support area in the mid-$0.30s but has faced severe selling pressure from a decisive resistance level above.
- Attempts to reclaim this 100-period SMA supply zone have proved abortive, with the support below keeping momentum alive.
- For Cardano to target higher prices, it needs to break above this 100-period SMA.
- A break above the 100-period SMA would open the way for a 2x rally for Cardano.
Cardano Sits at Major Support Zone
A bright start to the year was cut short when Cardano dumped violently from $0.428 on January 14 to the lows of $0.342 five days later. Meanwhile, the coin has stabilized around a key support in the mid-$0.30s, a TradingView analysis from CoinCodex highlighted.
The commentary noted that this support level has been the first to cushion selling pressure. Instead of ADA slowly correcting, as previously seen after a rejection, it has stabilized around the $0.35 support level.
However, CoinCodex emphasized that this does not suggest the bottom is in, just that market participants are beginning to digest earlier moves without emotion. The analyst added that dips into this supply zone are getting absorbed faster than before.
The recent market trend confirms this. Specifically, ADA has rebounded from its lows of $0.342 to $0.373 two days ago before retracing slightly to $0.360 at the time of writing.
Cardano Struggles with Higher Prices
Despite stabilizing at the current support, attempts to reclaim higher resistance areas have not yielded much result. The analysis highlighted that the $0.396 level, aligning with the 100-period simple moving average at the time, has repeatedly rejected higher prices.
Cardano fell below this indicator during the January 18 dip and failed to reclaim the area. Currently, the indicator stands at $0.388, 7% below the market price.
What ADA Needs to Do
Notably, the commentary highlighted that for Cardano to target higher prices, it needs to break above this 100-period SMA. According to the analyst, any upside move short of this would represent a relief rally, rather than a trend reversal.
However, the mid-$0.30 support is also crucial. As long as ADA keeps above it, then it can keep retesting new highs.
According to the analysis, a break above the 100-period SMA would open the way for a 2x rally for Cardano. A shared chart shows that the next major resistance lies at the 1.271 Fibonacci extension at $0.886.
It bears mentioning that this move remains highly speculative and based on analysis rather than an assured price prediction. As such, it is not financial advice.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
