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Cardano (ADA) has been in a downtrend since reaching its all-time high on September 2nd, and has practically swayed below its 20-50 EMA. The decline proved to be quite dangerous for the bulls, as they were unable to defend the $1 mark.
A close above $0.9 would put ADA in position for a possible retest of its Point of Control (POC). Following that, it may experience a pullback from near the $1.1-zone and revert to its long-term trend. The seventh-largest cryptocurrency is most likely positioned to reclaim the critical $1-support (now resistance). It was trading at $0.888 at press time, down 1.2 percent in the previous 24 hours.
ADA Daily Chart
Source: TradingView, ADA/USDT
ADA has formed a six-month-long descending channel (reversal pattern, yellow) since its ATH, while the alt was in a steep downtrend. Furthermore, it has lost more than 40% of its value since February 10th, after forming a bearish flag and pole on its daily chart.
As a result, it fell to a 9-month low on February 24th, while buyers stepped in to defend the $0.82 level. It is critical to note that this level of support has been used as a testing ground for nearly a year. As a result, the bulls have been exerting pressure and rejecting lower prices for the past two days.
From here, assuming the bulls want to keep the $0.82-mark intact, the alt is looking for a retest of the 20-EMA, followed by a reclaim of the $1-support. Historically, ADA has risen from the lower trendline of the down-channel and tested its 50-day moving average before returning to the downtrend. However, the next few candlesticks would reveal whether or not history would repeat itself.
Rationale
Source: TradingView, ADA/USDT
The bearish RSI recovered from its oversold level, as expected. Any close above the 38-point mark would almost certainly result in a retest at the 44-point mark. As the bulls attempted to topple these barriers, a recovery towards the midline appeared possible in the days ahead.
The DMI confirmed the increased bearish influence. The -DI is approaching its long-term peak, so the chances of a recovery in the coming days are good.
Conclusion
While a trend reversal may still necessitate extraordinary efforts on the part of bulls, a test of its Point of Control while closing above the 20 EMA appeared likely in the medium term. Nonetheless, traders/investors should keep a close eye on Bitcoin's movement, as ADA has a 71% 30-Day correlation with the king coin.
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