Cardano has registered a 7% drop today as the market’s downward momentum continues.
The downswing pushed ADA below the vital $0.50 support level.
Further selling pressure could result in a correction to $0.34.
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Cardano kicked off Thursday in bearish mode after dipping below a vital support level. The lack of trading volumes in the cryptocurrency market suggests that further losses can be expected.
Cardano Prepares to Dip Lower
Cardano looks like it’s crumbling under pressure after breaching a crucial area of support.
The eighth-largest cryptocurrency by market cap has suffered a 7% drop over the past eight hours. The sudden downswing pushed ADA below the vital $0.50 support level and generated over $1.40 million worth of liquidations across crypto derivatives exchanges. Further selling pressure around the current price levels could increase the chances of a steeper correction.
Cardano appears to be breaking out of a symmetrical triangle that developed on its four-hour chart. The height of the pattern’s Y-axis suggests that ADA entered a 33.5% downtrend when it dropped below the $0.50 support level. A four-hour candlestick close below the 50% Fibonacci retracement level at roughly $0.48 will likely confirm the pessimistic outlook.
In this eventuality, Cardano could continue to trend down toward $0.34 or even $0.32. It is worth noting that ADA’s May 12 swing low at $0.38 could serve as potential support as it descends.
The odds will likely continue to favor the bears as long as ADA remains trading below $0.55. However, a sustained four-hour candlestick close above this resistance barrier could invalidate the pessimistic outlook. Slicing through this supply wall could accelerate the number of buy orders behind Cardano, pushing prices toward $0.61.
Fear, uncertainty, and doubt have taken over the cryptocurrency market in recent weeks, with the Fear and Greed Index revealing high levels of pessimism among market participants. Moreover, on-chain and technical indicators suggest that the prevailing negative sentiment has not yet taken its full toll on Bitcoin, indicating that a market bottom is not yet in sight. Although investing when sentiment is low has historically served cryptocurrency investors well, the current conditions appear ripe for a steeper downturn.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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