ADA saw some relief on the charts. For how long though?
- ADA rebounded somewhat from a yearly low of $0.3 $0.3 support remains crucial; nearly 540k addresses bought ADA at the level
Cardano [ADA] hit a new yearly low in 2024 after dropping to $0.27, breaking the record of its June lows, which was $0.31. However, the June and August rebound for ADA happened above $0.3 on the charts.
On the back of some difficult price action, ADA tapped a 6% rally on Tuesday, 7 August. In fact, at the time of writing, it was up 1% on the 24 hour charts, with the crypto trading at $0.33. Simply put, it seemed ready to ride the overall market recovery further.
Hence, the question – What are the key levels to watch out for in the recovery rally?
Key ADA levels to consider
Source: ADA/USDT, TradingView
Like the ADA dump in June, the recent bloodbath eased at a weekly breaker block, marked white, near $0.3. This confirmed the price level as a key interest area for bulls, as seen in November 2023 and recently in 2024.
If ADA pushes forward with the recovery, there are two immediate bullish targets to consider. The first target would be a 78.6% Fib level ($0.36), which could translate to about 9% gains if hit. Secondly, the retest of the trendline resistance could yield 29% gains from the breaker block.
However, key technical chart readings were weak at press time, as shown by the RSI (Relative Strength Index) and the CMF (Chaikin Money Flow). It meant that buying strength and capital inflows were still below average.
In short, the conservative recovery target would be the 78.6% Fib level, unless Bitcoin advances further above $60k.
However, a drop below the demand and breaker block at $0.3 could accelerate ADA’s dump too.
Majority of addresses bought ADA near $0.3
A drop below $0.3 could accelerate a bloodbath because most addresses bought the altcoin at $0.3. Nearly 540k addresses, holding 5.56 ADA, acquired the altcoin between $0.3 – $0.22. As a result, a drop below the support would trigger a huge number of users to panic sell to cut their losses.
Source: Into The Block
Meanwhile, speculators in the Futures market, especially those with leveraged long positions, have minimized their ADA exposure.
According to Coinglass’s Long/Short ratio, the number of leveraged long positions increased from 46% to 49% between 2 and 6 August.
On the contrary, the figure dropped slightly as of press time, denoting the Futures market wasn’t so bullish on ADA.
In short, ADA could see slow recovery, but the $0.3 support remains crucial.
Source: Coinglass
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
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