With Cardano [ADA] breaching $0.4565, bears could eye this level next

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

Cardano’s [ADA] recent drop from the $0.63-level shaped into a down-channel retracement in the daily timeframe. The 50 EMA (cyan) joined hands with the horizontal resistance to propel this downfall.

The broader trajectory would likely favor the sellers in the coming days. Unless the buyers come to the rescue at the immediate support level, ADA could see an extended decline before a strong revival.

At press time, ADA traded at $0.4522, up by nearly 1.51% in the last 24 hours.

ADA Daily Chart

Source: TradingView, ADA/USDT

As the price action fell below the 20 EMA, the immediate narrative for the altcoin took a bearish flip. The down-channel has shunned the recent bullish efforts to reclaim critical support levels.

Further, the price action now entered a tight phase as the gap between the lower and upper bands of Bollinger Bands (BB) decreases. After an extended squeeze, the alt would likely witness a high volatility phase in the coming days.

With the price action breaching the long-term $0.4565-support, the bears could eye for a close below the $0.43-level. In this case, potential targets would rest in the $0.401-zone. A sudden buying resurgence above the Point of Control (POC, red) could disregard the bearish tendencies. Here, the buyers’ efforts could be short-lived by the 50 EMA by the sellers.  

Rationale

Source: TradingView, ADA/USDT

The Relative Strength Index (RSI) took a relatively bearish stance while retesting the 39-mark support. A breach below this support could aid the sellers in finding fresher lows.

Further, the Chaikin Money Flow (CMF) saw a close above the zero-mark and affirmed ease in the selling vigor. However, the price action marked lower peaks during this time. So, any reversals on the CMF could confirm a bearish divergence.

Also, the Directional Movement Index (DMI) exhibited a bearish stance. But the ADX of ADA revealed a substantially weak directional trend.

Conclusion

With sellers finding a break below the $0.45-level and the indicators taking a bearish tilt, ADA could see further downside risk. The targets would remain the same as above.

Nonetheless, traders/investors should keep a close watch on Bitcoin’s movement and its effects on the wider market to make a profitable move.

Source: https://ambcrypto.com/with-cardano-ada-breaching-0-4565-bears-could-eye-this-level-next/