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01/29/2022

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Here’s why Cardano can see an accumulation phase in the next few weeks

The post Here’s why Cardano can see an accumulation phase in the next few weeks appeared on BitcoinEthereumNews.com. The long-term trend for Cardano has been downward. It broke beneath the $1.91 mark in November and has steadily fallen to...

Here’s why Cardano can see an accumulation phase in the next few weeks

The long-term trend for Cardano has been downward. It broke beneath the $1.91 mark in November and has steadily fallen to the $1.2 level since then. In recent weeks, the price fell as low as $0.91, although it rebounded back above $1.  There was some indication of an incoming bounce for Cardano from the $1 area. Would this scenario occur, and can Cardano reverse the downtrend?

Source: ADA/USDT on TradingView

Each time a crucial support level was broken in the past few months, it has been retested and confirmed as resistance. This happened at the $2.32 level throughout October, the $1.91 level in mid-November, and could now repeat for the $1.2 level over the next few weeks.

A set of Fibonacci retracement lines were drawn based on ADA’s drop from $2.32 to $0.91 from November to mid-January. These levels appear to be respected quite well in the same time period and have acted as significant levels of support and resistance.

The 23.6% retracement level at $1.26 has confluence with the important support level at $1.2, which made it an area where buyers and sellers would skirmish for control. It was likely that sellers would once more win, in continuation with the former trend.

A set of equal lows need to be formed on the charts, followed by a breakout, to signal that an accumulation phase had occurred and the price was once more driven by buyers. That has not yet happened for ADA.

Rationale

Source: ADA/USDT on TradingView

The RSI formed a higher low on the daily chart even as the price formed a lower low. This was a bullish divergence, coupled with an area of strong demand at $1. Hence, a move upward could occur, and climb as high as $1.26 before rejection. This would affirm that the former support was flipped to resistance. Such a move would also entice late buyers with a show of bullish strength before reversing.

The Cumulative Delta Volume was in a decline, alongside the price. It also showed that demand was yet to be seen at the $1 mark, as sellers have remained strong in the past couple of weeks. The Chaikin Money Flow climbed toward +0.05 as well, and could move above to denote strong capital flow into the market.

Conclusion

In the coming days, ADA could see some demand which could propel the price to $1.2-$1.26. However, at the time of writing a move further north was unlikely, as sellers are still strong in the market. Below $1, the next level of support lay at $0.81.

Source: https://ambcrypto.com/heres-why-cardano-can-see-an-accumulation-phase-in-the-next-few-weeks/

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