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Cardano (ADA) is trading at $0.25 within a critical horizontal support area. The region has been present since the beginning of the year. Readings taken from weekly and daily timeframes are mixed, making it difficult to determine the direction of future trends until the price makes a decisive move in one direction or another.
Critical Zone for ADA!
Technical analysis on the weekly timeframe shows that ADA is hovering just above the $0.25 horizontal support area. This area has been an important support zone since the beginning of the year. The price action in this region is giving conflicting signals. On the bullish side, ADA seems to have formed a triple bottom formation. The triple bottom is considered a bullish reversal formation and a significant upward movement can be expected.
On the bearish side, the price has fallen below a descending resistance line since the beginning of May. More recently, the trendline rejected the price in July, forming a long upper wick. When combined with the $0.25 area, this could create a descending triangle, which is considered a bearish trend.
Price Outlook for ADA!
Moreover, the weekly RSI is uncertain. Investors use RSI as a momentum indicator to assess whether a market is overbought or oversold and to determine whether an asset is being accumulated or sold off. If the RSI value is above 50 and the trend is upward, the bulls are still favored, but if the reading is below 50, the opposite is true. The RSI shows a bullish trend but there is a risk of breaking the trendline. Furthermore, being below the 50 level can be seen as a sign of a bearish trend.
Therefore, whether the price will break above the resistance line or below the $0.25 area can determine the direction of future trends. A breakout can result in a 60% increase towards the $0.42 resistance area, while a breakdown can initiate a 40% decrease towards the next nearest support at $0.15.
