Cardano bulls will feel more pain if they have to rely on both technical and fundamental indicators.
Cardano ( ADA ) has recouped a large portion of the weekly losses incurred in this week’s crypto-market rout.
The intraday high price of ADA was $0.60 on May 13. This came after the price of ADA rebounded from $0.38 its week-end low — a 58% rally.
In the aftermath of similar price actions in crypto market, the huge upside retracement saw top cryptos Bitcoin ( BTC and Ether ( ETH) rebounding respectively by 23% and 25.75% from yesterday’s lows.
However, the rapid ADA recovery doesn’t promise an extended upward continuation. At least not according to three factors below.
Stock market crash is far from over
First, the price movement in the Cardano, and similar crypto-assets, has been in lockstep to U.S. Equities, particularly tech stocks.
Notably, Cardano would likely be influenced by major stock moves if there was a correlation coefficient of 0.93 between ADA (tech-heavy Nasdaq Composite) and ADA (ADA).
Furthermore, analysts point out that the chances of Nasdaq experiencing a sharp recovery are slim. They highlight the high valuations of Big Tech stocks as well as the possibility of them collapsing further in an environment with higher interest rates.
Richard Waters (West Coast editor of the Financial Times) comments:
“This is the area where valuations were stretched the most and where the market is having trouble finding its nadir.”
Simply stated, Cardano’s persistently positive correlation to Nasdaq could lead to more steep declines in ADA markets, at least for the moment.
ADA’s fifth wave “missing”
A second hint at a possible Cardano decline is provided by Capo Crypto, an independent market analyst.
, a pseudonymous analyst, notes that ADA could fall next to the $0.30-$0.35 area, given its potential to paint the fifth wave of a bearish Elliott Wave setup.
The target area coincides with the support zone from January 2021, which preceded a bull run of 850%.
Descending channel breakdown
Cardano is breaking down in another sign weakness, below its multi-monthly descending channel.
ADA is trending lower within a range of falling parallel trendlines. This reflects traders’ current strategy to buy near the lower trendline, and sell toward the higher trendline.
However, ADA/USD fell below the trendline at $0.568, indicating that traders had missed the buying opportunity.
As discussed above, buyers rushed to $0.378 to acquire ADA. This led to a price rebound. The trading volume supporting the recovery movement was lower than that during the selloff, which indicates a weakening trend in rebound.
Simultaneously the upside retracement movement showed signs of weakness after testing resistance’s bottom in the descending channel — a sign of the breakdown. The likelihood that ADA will continue its downtrend if the bulls fail flip the price ceiling to support is much greater.
A decisive move above the channel’s lower trendline could lead ADA to test its upper trendline at $1.