The Case for Cardano to Drop to 50 cents Before Bottoming
Cardano (ADA) has the potential to resume lower and fall as low as $0.5. A major reason for this bearish scenario is ADA's descending channel which the bears may try to tag again. This will be a classic break and retest price structure.
Descending Channel
A descending channel pattern has formed on ADA's daily chart, starting with the price falling from its all-time high of $3.09. The breakout to the upside has lost momentum, and now we have 3 bearish factors that align to call for more downside:
First, the bears reclaimed the $1.00 psychological number after an initial failed rally.
Second, the Relative Strength Index (RSI) readings also point lower as the oscillator is back below the 50 mid-level signaling bearish momentum.
Lastly, ADA's price is trading well below its 200-day Simple Moving Average (SMA), which signals that we're in a bearish market.
Looking forward: The next major support to the downside comes near the current low of the year of $0.74.
A daily break and close below this level will open up the door for ADA's price to test $0.50 and, subsequently, the upper slopping trendline of the descending channel.
