Cardano has experienced a significant correction from recent highs, with ADA/USD breaking down from a double top formation and subsequently finding support near the crucial $0.61857 level.
The cryptocurrency is now attempting to stabilize around the $0.66215 area as buyers look to establish a base for a potential recovery. However any rallies could be capped at the Fibonacci retracement levels or area of interest that spans the broken neckline of the double top close to the $0.7500 barrier.
Currently trading at $0.66215, Cardano is positioned between critical Fibonacci levels, inching closer to the 38.2% Fibonacci level at $0.70486. This zone represents a crucial battleground where the sustainability of any recovery attempt will be determined.
Bearish SMA Bias
The moving average structure clearly illustrates the bearish shift in momentum, with shorter-term averages positioned well below longer-term ones. This configuration confirms that the path of least resistance remains to the downside, though the recent bounce suggests that selling pressure may be beginning to wane.
Price action is currently trading below all major moving averages, which are now acting as dynamic resistance levels. For Cardano to signal a more meaningful recovery, it would need to reclaim these moving averages, particularly around the $0.70-$0.73 zone where multiple averages appear to converge.
The MACD indicator has been deeply negative throughout the decline, reflecting the intensity of the selling pressure. However, recent readings suggest that the momentum oscillator may be beginning to flatten out, potentially indicating that the worst of the bearish momentum could be behind ADA.
Meanwhile, the stochastic oscillator has been oscillating between oversold and neutral territory, currently showing signs of attempting to climb higher from oversold levels. This could suggest that short-term momentum is beginning to shift in favor of buyers, though confirmation would be needed through sustained price gains.
Cardano Recovery Prospects
The immediate focus for Cardano remains on whether it can successfully defend the $0.61857 support level and build upon the recent bounce. A sustained move above the 38.2% Fibonacci retracement at $0.70486 would be encouraging and could open the door for a test of the 50% level at $0.73152.
However, any recovery attempts are likely to face strong resistance at the Fibonacci levels, particularly the 50% and 61.8% retracements at $0.73152 and $0.75817 respectively. These levels coincide with the broken double top neckline support turned resistance, creating a formidable barrier for bulls to overcome.
A failure to hold current support levels could result in a retest of the $0.61857 floor or potentially even lower levels.
Given the current technical setup, Cardano appears to be at a make-or-break juncture where the next few sessions could determine whether this bounce represents the beginning of a more sustained recovery or merely a temporary respite in the broader downtrend. Broader financial market developments related to global trade updates could determine how risk assets like crypto could behave.
