Cardano Price Analysis: ADA Struggles With Recovery As Losses To $0.33 Linger

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Cardano (ADA) struggles to escape from a bearish chart pattern as the bearish cloud remains hanging over the crypto industry. ADA is down 0.83% and still trades below the $0.4 level after breaching it on May 6. However, a bullish signal from the Moving Average Convergence Divergence (MACD) indicator could mean that ADA is ready for a recovery.

Cardano Price Faces Stiff Resistance On The Upside

After turning away from the $0.462 reached on May 15, ADA price has recorded a series of lower highs and lower lows leading to the appearance of a descending parallel channel on the daily chart.

A descending channel is a highly bearish chart pattern that points to a continued downtrend as long as the price remains within the confines of the technical formation.

ADA trades at the upper boundary of the channel at $0.368 as bulls fight to flip this level back into support. If they succeed, the smart contracts token will rise higher first toward the 100-day SMA at $0.376 and later the 50-day SMA to $0.391.

Higher than that, the altcoin may rise to tag the $0.395 major resistance level. This is where Cardano’s upside could be capped in the short term, representing a 7.57% uptick from the current price.

ADA/USD Daily Chart

Cardano Price Chart - May 22 — TradingView Chart: ADA/USD

Supporting the upside potential for Cardano was the upward-facing Relative Strength Index (RSI). This indicated that the buyers were re-entering the market.

In addition, the upward movement of the MACD also added credence to the bullish thesis. Note that this trend-following indicator had just sent a call to buy Cardano on the same daily chart. This occurred during the early Asian trading hours on Monday when the 12-day Exponential Moving Average (EMA) crossed above the 26-day EMa. This suggests that the market has flipped in favor of the upside.

On the downside, ADA faced stiff resistance in its recovery path. This is reinforced by on-chain data from Intotheblock. Its In/Out of the Money Around Price (IOMAP) model showed that the area where the 50-day SMA sits is within the $0.3793 and $0.391 price range. This is where approximately 4.62 billion ADA tokens were previously bought by roughly 196,840 addresses.

Cardano IOMAP Chart

Any attempts to push the Cardano price past this level would be met by immense selling from this cohort of sellers who may wish to break even.

Note that a daily candlestick close below the 200-day SMA at $0.351 would invalidate the bullish outlook. The next logical move would be a drop toward the lower boundary of the governing chart pattern at $0.329, representing an 11% decline from the current price.

Promising Alternatives To ADA

Those seeking to place their long bets on Cardano have to wait for a decisive close above the 50-day SMA at $0.351. This would confirm a clear bullish breakout, marking the start of a sustained recovery.

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