Cardano (ADA) has faced selling pressure for over a month, trading near the support line of a long-term corrective formation. ADA’s price broke below the short-term horizontal support area that had been established since the beginning of the year, raising questions about its future trajectory.
After reaching its highest level in December 2023, ADA’s price confirmed a deviation above a horizontal resistance area, entering a downward channel. The resistance and support trend lines within this channel have been tested multiple times, with the latest touching a Fibonacci retracement support level.
The daily RSI level indicates a downward trend, serving as a momentum indicator for investors to assess market conditions and determine whether an asset is overbought or oversold. A falling RSI below 50 suggests a bearish trend.
Technical analysis on a six-hour timeframe aligns with the daily downtrend, considering price action, RSI, and Elliott Wave count. The price movement shows ADA departing from the horizontal support at $0.48, with a declining RSI under 50 reinforcing the bearish forecast.
According to Elliott Wave theory, ADA is in the C wave of an A-B-C corrective structure, potentially leading to an 11% drop to $0.405. However, reclaiming the $0.48 horizontal area could invalidate the bearish scenario, allowing ADA to rise by 25% to $0.62.