Cardano Tests Critical Support as Network Disruptions Weigh on Sentiment
Market Pulse
- ADA has lost more than a third of its value since late September, touching the lowest level in over two years.
- The latest sell-off was fueled by network issues on Cardano that temporarily halted the blockchain and a series of exchange suspensions due to technical problems.
- This caused panic liquidations and unabated downside pressure, driving prices into oversold territory and nearing the November 2018 trough of $0.03641.
The recent selloff sliced through the 200-day moving average, which rarely happens when the trend is clearly bullish. This suggests the primary trend is shifting from higher to lower and could be a signal that long-term investors should prepare for further downside.
| Metric | Value |
|---|---|
| Asset | CARDANO (ADA) |
| Current Price | $0.40 |
| Weekly Performance | -20.68% |
| Monthly Performance | -36.70% |
| RSI (Relative Strength Index) | 23.3 |
| ADX (Average Directional Index) | 53.4 |
| MACD (MACD Level) | -0.06 |
| CCI (Commodity Channel Index, 20-period) | -165.49 |
RSI Drops to 23.27 – Deep Oversold Territory Matches Historical Bottoms
With the oscillator currently at 23.27, it signals extreme oversold conditions that haven’t been seen since the 2022 market flush. This level has been a major low point for ADA with analog readings in May 2022 and June 2023 leading to 40-50% relief rallies. Also, this momentum exhaustion couldn’t have come at a better time given the panic selling triggered by the network upset trading below $0.50.
Therefore, swing traders looking for a quick trade and a potential 5-10% bounce can consider entering Litecoin/Bitcoin around this deep RSI level with a tight stop underneath the 4-hour block. Given the volatility, a quick spike higher can be anticipated so trailing stops could be used to lock in profits.
ADX at 53.38 Confirms Mature Downtrend Nearing Exhaustion Point
The price at which we have entered the ADX exhaustion zone is 53.38. This is seven points lower than the level at which we entered it last time (60.85) in November last year. This means the downtrend has not been as strong or prolonged as it was then, suggesting the subsequent rally (and/or consolidation) is likely to be smaller in both time and price.
What is interesting to note is that ADX surged in conjunction with the network outage reports. It jumped from the mid-30s to the extreme levels in two weeks. Such sharp moves usually indicate capitulation. Hence, day traders need to watch out for more volatility and possible exhaustion indications for the trends; ADX turning from such high levels leads to strong reversals.
Price Trapped Below Entire EMA Ribbon Since Chain Split News
The moving average structure itself affirms the bearish narrative. ADA is traversing way below all the important EMAs with the 10-day standing at $0.46, 20-day at $0.51, and the 50-day EMA at $0.54. Every uptick post the deformed transfer episode has been barred at these sloping EMAs marking a steady down-trending pattern.
The most telling sign comes from the 200-day EMA that is up at $0.71, which is 44% above the current price. This shows how much distance is there on the upside for the cryptocurrency, post the damage that was done to its technicals due to the network issues. Bulls will have to scale and sustain above the 20-day EMA that is at $0.51 to begin with the recovery. Until that happens, the bears will try to sell the rally.
Support at $0.39 Tested Six Times – Network FUD Tests Bulls’ Resolve
Currently, it is much easier to judge this market from the short side, with resistance starting from $0.47 through $0.50 and a clear line in the sand from $0.47 to $0.59. Breaking through $0.47 would force future short positions to make do or die decisions, and that’s the best spot to trigger stop runs.
Buyers have initiated a price floor at $0.39 through early June. The first sell-stop protection is likely beneath that level on the daily time frame; however, the measured move of the descending triangle would target $0.327 given a break of $0.39 on increasing volume. An ultimate target would be the .78 fib retrace at $0.258.
The current market structure presents an interesting divergence – while the headlines are full of doom, the price action is showing buyers stepping in from the level markets get defined at. The $0.33-0.39 zone makes up the final support cluster before the 2020 lows. A daily close below $0.388 (the monthly low) would trigger the next leg lower and take price toward $0.29, where the next high-volume node of the profile is found.
Bulls Need Decisive Close Above $0.47 to Escape Downtrend Prison
If the price could take back the 10-day EMA at $0.46 on good volume, it might indicate a potential recovery. To turn the market structure to uptrend, bulls need to surpass the previous daily close of $0.47 and target the 20-day EMA at around $0.51. Either positive network news and updates or settling the Upbit case could trigger this.
In case the $0.388 support is broken on a daily close, the bearish scenario will gain momentum. This will result in bottom-fishers getting trapped, and the price could cascade down to $0.33 and then to $0.29. Another network problem or prolonged exchange closures could further fuel the breakdown, and ADA might slump to multi-year lows around $0.25.
Due to the deeply oversold nature and historical support continuing to hold up despite the negative news, the highest probability path is ADA consolidates between $0.39-0.47 and digests the recent network crisis. Smart money accumulation at these levels implies a relief bounce is likely around the corner, however, in order to gain any sustained momentum to the upside, the technical issues will need to be resolved.
