Cardano was just about to test a critical support level – A failed attempt could result in a further price decline.
Edited By: Saman Waris
- ADA was done by more than 4% in the last seven days.
- Most metrics and indicators suggested that ADA might fail to test its support.
Cardano [ADA] investors must remain cautious as the token was resting at a critical level.
The recent price decline pushed the token’s price down to support, and a plummet under it could cost ADA its spot on the list of the top 10 cryptos.
Cardano’s critical state
Like most cryptos, ADA’s weekly chart was in the red as the token’s price had dropped by more than 4%. In the last 24 hours, Cardano witnessed a 1.6% price drop.
According to CoinMarketCap, at the time of writing, ADA was trading at $0.4383 with a market capitalization of over $15.6 billion, making it the 10th largest crypto.
However, ADA’s top 10 spot might be at risk as the token’s price was sitting at a crucial support level.
AMBCrypto’s analysis of ADA’s daily chart revealed that the token was just about to reach its support level of $0.4353.
The token had already touched that support twice in the past few weeks. Each time, it manages to successfully test it and bounce back.
If the same happens on this occasion, then ADA’s might approach its resistance near $0.51. However, if it fails to test this level, then things can get dangerous.
Will ADA test its support?
To see whether ADA would test its support and register a price uptick, AMBCrypto analyzed Santiment’s data. We found that ADA’s MVRV ratio dipped last week.
After the increase, whale activity around the token also declined. Cardano’s NVT ratio spiked, meaning that it was overvalued, which hinted at a further price drop.
Additionally, its Weighted Sentiment declined, meaning that bearish sentiment around the token was dominant in the market.
These metrics suggested that the possibility of ADA plummeting under its support was high.
To better understand what to expect from the token, AMBCrypto then checked its technical indicators. We found that ADA’s price was resting under its 20-day Exponential Moving Average (EMA).
Both its Chaikin Money Flow (CMF) and Relative Strength Index (RSI) registered downticks.
The Money Flow Index (MFI) also started to decline, indicating that it was much more likely for the token to go under its support.
Nonetheless, the MACD provided much-needed hope as it showed that bulls were still leading in the market.
AMBCrypto then took a look at Hyblock Capital’s data to find out what might happen if ADA fails to test its support.
As per our analysis, if the downturn continues, then Cardano’s price might first fall to $0.41. At that level, ADA will have an opportunity to rebound.
