Cardano's price shows the formation of a setup that hints at a breakdown. The resistance present above the current position adds credence to this drop.
Cardano ADA price has been setting up higher highs and higher lows since May 28. A rising wedge pattern level appears to form when these swing points are connected using trend lines. Such a converging price action for Cardano ADA tends to result in a violent drop after a decisive close below the lower trend.
As such, the technical formation forecasts a 16% downswing, obtained by measuring the distance between the first swing high and low. Adding this measure to the breakout point at a price of $1.725 moves places Cardano's price at $1.448.
While a 16% correction seems possible from a theoretical perspective, the presence of the demand zone, ranging from a price of $1.488 to $1.566, might stunt this drop.
Hence, investors can expect a 10% drop to $1.566 or a sweep into this zone. Only in extremely bearish scenarios, the ADA price might break below the said support level area and head toward the theoretical target point at $1.448.
While the bearish descent seems to be fixed due to a rising wedge, investors should note that this patterned level is formed on an uptrend. Therefore, a sudden price spike in potential buying pressure could tilt the odds in the bulls’ favor.
The stiff resistance level at the price of $1.833 has prevented Cardano's price from moving higher for nearly two weeks. Hence, a decisive close above the price of $1.852 will invalidate the bearish narrative detailed above and kick-start a Cardano bullish outlook.
In this case, the ADA price might rally 10% to tag the resistance level at $2.037.
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