Cardano (ADA) Continues Its Slump Tests Key Support

A week ago, Newconomy reported about Cardano (ADA) slumping to the new one-year low with a risk of moving to the new all-time lows. The project is suffering from the not so successful product,  as it currently lags behind its main competitors, thus the losses seen in the last couple of weeks are no surprise.

Whenever the entire market goes through the rough patches, the weakest currencies automatically become the worst performers. Tokens such as Stellar (XLM) and Ripple (XLM), which made gains prior to the cryptocurrency market slump, have been more immune to the overall bearishness surrounding the market these days.

Looking at the weekly chart of Cardano (Graph 1), the overall situation does not look positive at all. Once the price left the symmetrical triangle (the blue converging lines), the downfall was imminent. Since then, the coin has lost almost half its value, slumping to low $0.40s. Before that, the price action was trading sideline, while the energy is accumulated within the triangle. As soon as the initial breach was made early last week, all the energy burst into the next move, in this case, a bearish move.

Graph 1. Cardano (ADAUSD) price analysis

Moreover, the coin is also trading below the key descending trend line (the red line) which acts like a bull/bear line i.e. any move above this line will mean we are back in the bullish territory. However, as long as we continue to trade way below this line, currently at $1.00 handle, Cardano is very bearish.

The price stopped near the next big support as the 127.2% Fibonacci extension sits just below the $0.40 mark. It is likely to see a bounce off of this level as the bears’ pause in their push. It depends on the strength of the bounce what the overall reaction of the price action will be. A shallow bounce will likely be sold, and another push to the downside will be made.