The Cardano (ADA) cryptocurrency recently experienced a dip in its price after reaching a yearly high of $0.68 on December 14. This decline marked the end of a streak of eight consecutive weeks of bullish momentum, raising concerns among investors.
Cardano’s Impressive Rise to a New Yearly High
A closer look at the technical analysis on the weekly timeframe reveals that ADA’s price has been on a rapid upward trajectory since October, depicted by the green icon. During this surge, the price successfully broke through a long-standing horizontal resistance zone that had persisted for 420 days, resulting in the attainment of a new yearly high of $0.68 on December 14.
However, the recent price movement exhibited a bearish candlestick pattern characterized by a lengthy upper wick, symbolized by the red icon. Consequently, the ADA price has experienced a modest decline in value.
Analyzing ADA/USDT Weekly Chart
Market traders often utilize the Relative Strength Index (RSI) as a momentum indicator to identify whether an asset is overbought or oversold, guiding their decisions to accumulate or sell.
When the RSI registers readings above 50 and indicates an upward trend, it suggests that bulls still maintain an advantage. Conversely, readings below 50 point to a weakening position for the bulls.
Despite the slight dip in ADA’s price, the RSI remains above 50 and continues to trend upward, indicating a bullish trajectory.
Cardano (ADA) Price Forecast – Correction or Extension?
A detailed analysis of the daily timeframe for ADA’s price suggests the likelihood of a correction before resuming its upward movement to achieve new highs. This expectation is grounded in the Elliott Wave theory and RSI readings, which technical analysts use to identify recurring price patterns and investor sentiment to predict trends.
Cryptocurrency trader Blue Crypto holds the view that the primary resistance level for ADA stands at $0.68. A successful breakthrough at this point could lead to a rapid ascent towards the next resistance level at $0.90.
However, the prevailing analysis suggests that ADA may not surpass the $0.68 resistance level. Instead, it appears to have initiated the fourth wave within a five-wave upward pattern, as denoted by the black wave count, with sub-wave details in white. If this analysis holds true, ADA may experience an 18% decline, reaching the 0.382 Fibonacci retracement support level at $0.50.
The daily RSI corroborates this scenario as it has exhibited a bearish divergence, indicated by the green line.
Despite the bearish prediction, surpassing the $0.68 mark would extend wave three, potentially driving ADA’s price up by 40% towards the next resistance level at $0.88.
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