- The global market crash led to a short-term correction at Cardano.
- Half of the losses suffered have already been made up.
- Expect some consolidation before an upside breakout occurs.
Cardano (ADA) saw a sharp correction on September 7, falling 32%. In the meantime, investors and market participants are licking their wounds and have time to process the events of the past few days.
In hindsight, it looks like the correction was a little excessive and ADA has already made up half of its September 7 loss. Buyers got on willingly at $ 2, which of course is a major psychological brand. It hit the 55-day simple moving average (SMA) at $ 1.98. The price has never declined towards $ 1.89, but ADA would have completely offset its losses if it had, so buyers around and below $ 2 are very present.
Risk for Cardano from a possible reset
With a little more than 12% left for the price to recover, this correction is almost over and over. It could still take a major downward correction and even lure buyers into a bull trap. A look at the charts shows that two trend lines cross each other. The green ascending trendline has been the backbone of the rally since August 19th and has been tested four times. It even withstood the sellers’ first attempt on September 6th, so the green trendline has not been broken and will continue to hold some importance. A rule of thumb in trading is that support can turn into resistance, so this trendline now represents resistance for buyers to overcome at Cardano.
ADA / USD daily chart
Another problem is the red descending trendline that originated on September 2nd. There have been two solid tests that confirm that the sellers are following the trendline and defending it against any upward movement. This means that buyers are now facing two strong resistances that need to be broken above if Cardano is to move back to $ 3.
Buyers who got in late and missed getting in at $ 2 are best advised to wait or get in at very short notice. Sellers will eagerly wait for both trendlines to be defended at around $ 2.80 and have an incentive to go short again on ADA. Buyers will either enter on a break above both trendlines or wait for the relapse towards the monthly pivot at $ 2.35 before entering and pushing the price higher.