When will ADA’s downtrend come to a halt?

Bitcoin’s bear run is dominating the cryptocurrency market and the same has got investors hunting to discounted prices to buy their favorite token. One such example was Cardano. The altcoin was trading at a 75% discount when compared to record levels and investors could not help but wonder whether it was the right time to stack up on ADA. However, the technical analysis showed that good buy chances were running out and single support separated the alt from another decline. At the time of writing, ADA traded at $0.81, up by a marginal 0.6% over the last 24 hours.

Cardano Daily Chart

Source: TradingView

Cardano has been falling in spades and relief rallies In January were barely been enough to compensate investors who bought ADA’s top in September. Much was expected of ADA’s demand zone of $0.97-$1.04 – a region which had let to previous ADA run up’s, but bulls had not come to ADA’s rescue thus far. The token’s market structure became worse for wear during the late-January crash which resulted in a close below the aforementioned demand zone.

Since then, ADA’s price has traveled in unfamiliar territory. The Visible Range Profile (used to identify important resistance/support levels) showed weak support areas until $0.37. The tool shows historic areas of interest where buying and selling occur at high volumes.

On the flip side, there was a defensive resort available at $0.78, although it was unreliable support. Should a daily candle develop below this area, ADA’s value could be slashed by half in a worst-case scenario.

As one would expect in such conditions, the indicators maintained their bearish tone. The MACD has traded consistently below its half-line for nearly 6 months, setting up nicely for short traders.

Yes, the RSI was close to oversold and traders might consider that as an encouraging sign. However, the last few contacts with the oversold boundary have not resulted in a significant price hike.

Price Strategy

Source: TradingView

Bullish and bearish bets can be made in any market but it’s important to consider their probabilities as well. In that regard, shorting ADA made more sense than long setups. Investors can set up short trades at $0.76, take-profit can be set at $0.40. Stop-loss should be kept at $1.15, slightly above ADA’s demand zone. The trade setup carries a 1 risk/reward ratio.