Ranked as one of the most popular and appreciated tokens in the crypto sphere, the ADA coin has nevertheless suffered this bear market. With a correction of 90% spread over 400 days, we had a first bullish reaction a few days ago.
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Analysis of the ADA/BTC pair:
As you know, I like to take the temperature by comparing the token studied against BTC. Since we have a lot of history, I switched the chart to a monthly view to have a more global vision.
We can identify 3 main areas, namely:
- Overheating Zone
- Support (current level)
- Main Support (also corresponds to the latest historical support)
A little over a year ago, the ADA token entered the overheating zone, resulting in underperformance against the king of crypto-currencies. Currently, on intermediate support, we have no signal of force recovery. Indeed, all bullish attempts leave only wicks behind them, and the support is more than ever under tension. In the event of a break, we may well return to historic lows. It would not be impossible and would mean that ADA’s performance against the market is punctuated by cycles between the overheating zone and the primary support.
Monthly View Analysis:
Here is the ADA/USD chart in 1M view; as studied above, the underperformance against the market led to a violent correction as we returned below 0.862 Fibonacci. Usually, bottom zones are between the 0.618/0.786 Fibonacci zone; however, for digital assets (more volatile assets), we usually observe the creation of a bottom on 0.862.
So, in theory, the area between 0.786 ($0.70) and 0.862 ($0.45) is suitable for a DCA (Dollar Cost Averaging) plan. We can then expect lateral training around the $0.30 support, which will reinvigorate the price later.
You will surely have noticed the red zone. It corresponds to the lowest point during the previous correction. I named it Zone of No Return because, in my opinion, if we come back to test these points, the ADA token will have to worry about its long-term evolution dynamic. We would have a token that has completely swallowed its previous bullish movement and therefore generated no long-term progression. This configuration is often linked to a lack of interest in the project and sometimes to a prolonged trend towards $0. That’s why I only envisage a correction of $0.30.
Analysis in day view:
The view of the day is entirely encouraging because we have just broken a bearish trendline (oblique resistance); we made a pullback on it to look for other high points. In case of bullish continuation, we can consider the 0.382 (= $ 0.55) Fibonacci as the first upside target. This level is doubly important because it also corresponds to the previous TOP, which could lead to a more critical upward momentum (short reload zone) in case of a break.
However, I would like to remind you that any rise in ADA will not be possible without a bullish momentum on BTC. Indeed, let’s remember that ADA is underperforming the market right now, and it will take a lot of energy in the crypto market to bring the token back to $0.80. So BTC is to be watched closely.
To conclude this analysis, I will say that we have a token in price locations that are interesting in the long term but very dependent on the crypto market in the medium term. This bearish momentum against BTC excludes a potential rise against the current and will only mitigate the importance of bullish movements. This analysis is not investment advice; I encourage you to DYOR on your side.