The recent price action of Cardano (ADA) has been marked by a stall below the crucial $1 threshold, largely due to market-wide corrections observed over the past week. This setback saw Cardano dip below $1 on December 18, mirroring trends across the crypto industry. Although the long-term trend hints at a potential surge towards a new all-time high (ATH) on the weekly charts, technical analysis on TradingView suggests the possibility of a continued downward correction towards $0.43 before a robust upward movement may resume.
Current Price Movements Highlight Resistance and Cooling Period
Technical analysis of Cardano’s weekly candlestick timeframe reveals a significant resistance level around the $1.2046 mark. This resistance emerged following Cardano’s impressive 205% rally from $0.4322 in late October to $1.32 in late November.
This extraordinary price surge established significant lows that now act as support levels for ADA. Additionally, the rally propelled Cardano into the overbought zone on the Relative Strength Index (RSI) indicator, peaking at 82.87 on the RSI. Currently, Cardano is undergoing a cooling or corrective phase, with buying pressure consolidating as of this writing. This consolidation phase has opened discussions on the next directional move for Cardano, with substantial buying volumes noted in recent trading sessions.
Deep Correction Could Test Critical Support at $0.43
While the long-term outlook for Cardano remains positive, the possibility of a deep correction in the short term cannot be overlooked. Analysts have identified key support levels that ADA may revisit if a deeper correction occurs. The first significant support level at $0.7683 has already demonstrated its importance as a reactionary zone in recent price movements.
Below this, the $0.4322 level stands as the ultimate support for maintaining the current bullish trajectory. ADA must hold above this support to preserve its bullish stance; failing to do so could trigger further price declines and potentially shift the outlook to bearish. Additionally, the analyst notes $0.3166 and $0.2427 as primary supports, which were crucial during the previous bear market and are considered less likely to be breached in a prolonged downturn.
Despite the potential for a deep correction, Cardano’s recent market behavior and buying trends indicate a promising long-term perspective. At the time of writing, ADA is trading at $0.912, marking a 2% increase in the past 24 hours. Once Cardano clears the current resistance at $1.2046, it is well-positioned to challenge its $3.09 all-time high and potentially set new records in this market cycle.
In summary, while Cardano is currently navigating some resistance and potential corrections, the long-term outlook remains optimistic, with opportunities for growth once key resistance levels are surpassed.
