Cardano (ADA/USD) has been on a clear downtrend since late March, establishing a bearish channel that has guided price action over the past week. After reaching highs near the 0.7500 level, the cryptocurrency experienced a significant correction, bottoming out at approximately 0.6327 before showing signs of a potential recovery.
The recent price action shows ADA rebounding from its lows, currently trading around 0.6722, which suggests buyers have stepped in at key support levels. This bounce has created a short-term reversal pattern that traders should monitor closely for confirmation of a trend change.
Cardano Key Levels to Watch
The Fibonacci retracement levels drawn from the recent swing high to swing low provide crucial resistance zones that could determine the strength of any recovery. The 38.2% Fibonacci level at 0.6877 is serving as immediate resistance, which the price is currently approaching. Above this, the 50% retracement at 0.7047 and the 61.8% level at 0.7218 represent significant barriers that ADA must overcome to invalidate the bearish trend.
The current bounce is testing these levels, with the 38.2% Fib area likely to be a decisive point. A rejection at this level could reinforce the bearish outlook, while a clean break above could signal stronger bullish momentum developing.
ADAUSD Technical Analysis
The chart clearly shows both the 100 and 200 Simple Moving Averages (SMA) declining, with price action predominantly below both indicators, confirming the bearish trend. The 100 SMA (red) is below the 200 SMA (blue), indicating that the path of least resistance remains to the downside for now.
ADA’s price has been contained within a descending channel on the short-term, with multiple touches of both the upper and lower boundaries. The recent bounce from the lower boundary suggests a potential test of the upper channel line, which coincides with the 38.2% Fibonacci level, creating a confluence zone of resistance.
The MACD (Moving Average Convergence Divergence) indicator shows signs of a bullish crossover, with the MACD line crossing above the signal line and the histogram turning positive. This typically indicates increasing upward momentum and often precedes price rallies.
The Stochastic oscillator has moved up from oversold territory and is approaching the overbought region, suggesting that buying pressure has increased significantly. However, as the indicator approaches the 100 level, there’s a risk that the upward momentum might fade, potentially leading to another downturn if overhead resistance holds firm.
Cardano Price Outlook
If the current rebound continues and ADA breaks above the 38.2% Fibonacci level at 0.6877, it could target the 50% retracement at 0.7047, which also aligns with previous support that may now act as resistance. A stronger move could push towards the 61.8% level at 0.7218, which would significantly challenge the bearish narrative.
Conversely, if resistance at the current levels holds and the price turns lower, a retest of the recent lows at 0.6327 becomes likely. A break below this support could accelerate the downtrend, potentially leading to new lows.
Traders should watch for reversal candlestick patterns near the Fibonacci levels for clues about future price direction. The appearance of reversal patterns at resistance zones could indicate a resumption of the bearish trend, while strong bullish candles breaking through resistance might suggest a more sustained recovery is underway.
For a longer-term bullish case to develop, ADA would need to break out of the descending channel and establish support above the 61.8% Fibonacci retracement level. Until then, the technical structure remains predominantly bearish, with any upward moves likely representing corrective actions within the larger downtrend.
