ADA dip buyers defend key support: Will the bounce lead to $1?

Cardano (ADA) is facing a pivotal decision point as a recent price dip challenges the validity of its previous breakout above $0.86, with key support near the 20-day moving average ($0.73) and subsequent resistance at $0.94.

Key Point

ADA rebounded off a strong support level, increasing the potential for a move above the $0.94 resistance.

Historically, strong gains have been followed by sharp corrections across cryptocurrencies. Cardano experienced this pattern recently. Such pullbacks often cleanse weak positions before continuing an uptrend.

Cardano Price Prediction

ADA broke through the $0.86 hurdle during the week but failed to sustain the breakout, triggering a sharp decline on Wednesday. The price dipped below $0.86.

The bears drove the price towards the $0.73 20-day simple moving average (SMA) on Thursday. A long wick on a subsequent candle indicated buying pressure at lower levels.

The bulls now eye the $0.94 resistance. Breaking above this could pave the way for further gains towards $1.02, and potentially $1.17.

Alternatively, consolidating below the $0.86 breakout point or failing to surpass $0.94 suggests the prior breakout may have been a false signal (bull trap). A breakdown below the $0.73 20-day SMA would signal strong bearishness, potentially leading to further declines towards the $0.66 50-day SMA.

On the 4-hour chart, the moving averages are nearing a bearish crossover, signifying potential bearish recovery attempts. Sustaining a bounce above the $0.73 20-day SMA is crucial.

If the price decisively falls below the 20-day SMA on any time frame, the path back towards $0.75, and even lower to $0.70, appears possible. Deeper falls typically precede a longer delay before a potential resumption of an uptrend.

Conversely, driving the price back above the 20-day SMA would be bullish and could lead to attempts to reclaim the $0.94 resistance, potentially all the way back to the psychological $1.00 threshold and beyond.