fxstreet.com
- Cardano price is down 7% after witnessing the largest red day of the year.
- ADA rose by 66% in January.
- A candlestick close beneath $0.35 could induce a 20% decline.
Cardano price accomplished an impressive 66% rally in January. As the price continues to ascend, there are reasons to consider that a pullback is on the horizon. Traders should be awareof the risk that comes with entering the market early.
Cardano price is setting up a move
Cardano price is likely to see an influx of volatility as the final days of January wind down. The bulls have been persistently flexing their power as the price continues to ascend in a stair-step fashion. On January 29, the smart-contract token produced a new monthly high at $0.391. A day later, the bears produced the largest 24-hour decline in January - a 7% reduction in market value.
Cardano price currently auctions at $0.370. During the recent fall-off, the bears have breached the 8-day exponential moving average (EMA). A breach of the 8-EMA is often the first sign of a larger reversal. However, ADA recovered and rallied by 22% the last time the breach occurred.
The 21-day simple moving average hovers below the auctioning price at $0.360. The indicator was crucial during the early stages of ADA's 66% rally this month. So long as the price action remains above the indicator, the uptrend thesis targeting the mid- $0.400 zone is still valid.
ADA/USDT1-day chart
The bears will need to produce a closing candlestick beneath $0.360 to consider a bearish scenario. If successful, the Cardano price could decline towards 29 cents, which would be the 61.8% retracement level of January's trading range. The scenario creates the potential for a 22% decline from Cardano's current market value