Cardano’s latest bull run was under duress after profit-booking and a wider correction in the altcoin market evolved into some unpleasant losses for the world’s fifth-largest cryptocurrency. Moving forward, bulls had to scamper for support anywhere above the 23.6% Fibonacci level at $1.20 in order to preserve ADA’s rally. At the time of writing, ADA traded at $1.42, down by 4.3% over the last 24 hours.
Cardano 4-hour time frame
Traders seemed to have taken a liking to Cardano of-late as other large-mid cap alts exhibit rangebound movement. Strong trading inflows helped ADA generate a full 50% hike between 10-18 January. However, the resulting correction was brewing into a dangerous sell-off.
Hence, it was important for bulls to hold prices above $1.20. A favorable crossover between the 50 (yellow) and 200 (green) SMA’s would assists buyers at the 38.2% Fibonacci level until the broader market shows signs of improvement. A decisive close above the 20 SMA (red) could even push ADA by an additional 15%, back to $1.63.
Meanwhile, a lower low below $1.20 would invalidate a bullish outlook. In such a case, losses would likely extend all the way towards a safe zone between $1.0-$1.07. Overall, the drop would highlight a loss ranging from 21%-27%.
Indicators
The RSI’s streak of higher lows was at risk after the index slipped below a supporting trendline. This paved more downside for the momentum oscillator. A move below 45 would most likely confirm a bearish outlook.
Meanwhile, the MACD was dipping after flashing a bearish crossover yesterday. Successive red bars on its histogram pointed to some more near-term woes and the market was yet to develop any signs of an immediate reversal.
Conclusion
Buyers have to gather their resources at the 23.6% Fibonacci Level to alleviate a large chunk of selling pressure. An unwanted lower low below $1.20 would end hopes of an extended rally and damage ADA’s market structure.