Cardano Targets Historic Support Retest Amid Rejection from 1D Mitigation Block

Cardano could further retest lower levels as its structure remains bearish, with strong liquidity areas below acting as price magnets.

Cardano may have shown short-term momentum, but data suggests bears are still dominating proceedings. After a clear higher-price rejection mid-last week, $ADA has glided lower, but a positive start to the week during the Asian trading session has sparked optimism. However, a combination of market structure and sell-side liquidity points to further downsides.

Key Points

• Cardano may have shown short-term momentum, but analysis suggests bears are still dominating proceedings.
• The price has faced rejection at a 1-day mitigation block lying between $0.248 and $0.249.
• The rejection in the mitigation zone suggests weak price momentum, with the bearish lower high formation further confirming a bearish structure.
• Liquidity blocks often serve as price magnets, and the closest sell-side liquidity lies around $0.246.
• There is a draw-on liquidity area at $0.2203, an area where Cardano would fill institutional orders if it fell to it.

Cardano Rejection from 1D Mitigation Block

Specifically, this mitigation block lies between $0.248 and $0.249. Its lower boundary closely aligns with the lows of March 23, where Cardano found support temporarily before bouncing to an intraday high of $0.276 on March 25. What has followed this has been a drop to far lower prices.

A look at the 4-hour chart shows that the coin recently made a fresh lower high formation on March 28, when it rebounded to $0.253. Notably, this formation was within the 1-day mitigation block, with the short-term recovery fading quickly.

Now, $ADA has dropped out of this support block, following its over 2% drop on Sunday, recording its second successive weekly candlestick. The rejection in the mitigation zone suggests weak price momentum, with the bearish lower high formation further confirming a bearish structure.

Strong $ADA Liquidity Lower

Liquidity blocks often serve as price magnets, with market whales often dragging prices to those levels to grab liquidity. For Cardano, the analysis shows it has sell-side liquidity lower.

These are areas where large sell orders and traders’ stop-loss orders are, making them attractive places to shake out retail traders. Per the analysis, the closest sell-side liquidity is around $0.246, near the current market price.

Meanwhile, there is more draw-on liquidity lower, an area where Cardano would fill institutional orders if retested. The level is at $0.2203, slightly below its February 6 low. Notably, this area is a strong support area for $ADA and served as the price bottom during the previous cycle’s bear market.

Cardano would have to fall 10.4% from its current market price to reach this low. How it reacts from that level now depends on the broader market conditions and whether buying pressure returns.

However, a 4-hour close above $0.269 would invalidate the prospect of a revisit of the $0.2203 support level.

Cardano at Opportunity Zone

Despite the overall bearish momentum and expectations, analysts still believe this might be the best time to start buying into $ADA. One such outlook recently came from Santiment, which noted that the coin is in an “opportunity zone.”

The firm highlighted that periods of increasing bearishness are the best time to buy into assets like $ADA. When the average return among holders is at its weakest, selling pressure begins to fade and a market reset ticks closer. Additionally, the market always tends to go in the opposite direction when massive negative bets build.