Cardano (ADA) Price Prediction: Bearish Pennant Breakout Signals Likely Test of $0.39 Yearly Lows
- Crypto prices are broadly a tad lower on Tuesday amid a risk-off feel to macro trade.
- Cardano broke below a key pennant that had formed since mid-June, opening the door to a test of yearly lows.
- Should ADA break under $0.39, that could trigger a cascade of selling that could take it under $0.20.
Global financial markets are in a downbeat mood on Monday, and this continues to weigh on crypto. On top of the usual worries about central bank tightening, slowing global growth and persistently high inflation, investors are now worried about continued USD strength, with the euro having collapsed to parity versus the dollar, as well as fresh Covid-19 lockdowns in China.
As a result, the total market capitalization of cryptocurrency markets was last slightly lower on the day around $860 billion. That marks a more than 10% pullback from last Friday’s highs.
Investors are showing signs of caution ahead of the release of US Consumer Price Inflation (CPI) data on Wednesday and US Retail Sales data on Friday this week. Traders will recall that an upside inflation surprise back in June when the CPI data was released caused a dump in risk assets like stocks and crypto at the time. Taking some risk-off the table in case of a repeat of events is probably a wise move.
Bitcoin was last changing hands just below $20,000, having earlier found support in the form of an uptrend linking recent lows. Ethereum, meanwhile, was last changing hands around the $1,070s. A recent break below a short-term uptrend has opened the door for a test of late-June lows around $1,000, technicians say.
Cardano (ADA) Price Prediction
The native token to Cardano’s blockchain ADA tumbled around 6.0% on Monday amid a risk-averse start to the week for cryptocurrency markets. The drop, which saw ADA fall from around $0.46 to around $0.43, where ADA continues to trade this Tuesday, saw the cryptocurrency fall below two key levels of support.
Firstly, ADA/USD broke out to the south of a pennant structure that had been forming since mid-June and below a support trendline that can be traced all the way back to mid-May. Secondly, ADA/USD fell below its late-June lows.
Further big moves to the south are unlikely on Tuesday, despite the mood to global macro trade remaining in risk-off, due to the proximity of key US economic data releases later in the week. Once this data is out of the way and depending on its influence on Fed tightening expectations and recession bets, crypto traders will be freed up to place big bets once again and markets might start to swing.
Now that Cardano has broken below its recent pennant structure and late-June lows, the short-term technical outlook is bearish. The next support zone that the bears will be watching is the June lows around $0.42. Below that, there is the annual low around $0.39.
If global macro sentiment takes a real beating (i.e. stocks falling substantially, weighing heavily on crypto), then Cardano’s ADA is at risk of tumbling to fresh annual lows. A break below the key $0.39 area would open the door to a cascade of selling that could take ADA all the way below $0.20, given the lack of notable support levels to prevent such a drop.