Cardano (ADA) Is Retesting the Support Line of a Technical Analysis (TA) Pattern

An analyst has explained how Cardano is retesting the support line of a technical analysis (TA) pattern, losing which could spell a bearish outcome for the coin.

Technical analysis (TA) is an integral part of cryptocurrency trading strategies, and one analyst has highlighted a key support line that could determine the near-term trend of Cardano (ADA).

Analyst: Cardano Could See 17% Drop

In a recent X post, analyst Ali Martinez has explained how the 3-day price of Cardano has been observing a Descending Channel technical analysis pattern.

This pattern occurs when an asset is consolidating toward a net downside between two parallel trendlines. The upper line tracks successive lower highs in the price and the lower one lower lows.

When the cryptocurrency trades inside the channel, it’s likely to encounter resistance at the former and support at the latter. In the scenario that either of these levels don’t hold up during a retest, the asset can witness a breakout in that direction.

This means that a surge above the channel can be a bullish sign, while a fall under it a bearish one.

Now, here is the chart shared by the analyst that shows the Descending Channel that the 3-day price of Cardano has been trading inside for the last few months:

As is clear in the above graph, Cardano found a rebound near the bottom of the channel earlier in the month, although it didn’t go low enough to make a proper retest of it.

Since the recovery, the 3-day price of the cryptocurrency has returned to the midway line of the channel, situated at around $0.63. During the last few months, the coin has interacted several times with this line, with the latest instance being last month.

Back then, the asset initially found support at the level, but before long, the downtrend resumed and it fell below. With ADA once again retesting this line, it will be interesting to see what trend follows this time.

If Cardano ends up losing the line and a decline takes place, then the asset’s next destination could be the $0.54 mark, according to Martinez. Such a drop would mean a decrease of almost 17% from the current spot price.

Like the Descending Channel, there is also a pattern in TA known as the Ascending Channel. This one naturally occurs when the consolidation is toward the upside instead.

As the analyst has pointed out in another X post, XRP has been trading inside such a channel in the short term.

“XRP is trading within an ascending triangle, with key resistance at $2.22,” notes Martinez. “A breakout could spark a move toward $2.40.”

ADA Price

At the time of writing, Cardano is trading around $0.65, up around 20% in the last week.