The Cardano(ADA) price plunged dramatically over the last few days resulting in a breakdown of the parallel channel pattern and a 22.6% drop. Thus, the increased selling pressure results in the fallout of the crucial supporting EMAs planning to breach the $0.45 support level. So, is this an opportunity to buy the dip, or will the downtrend continue below the $0.4 mark?

Key points: 

• The channel pattern breakdown indicates the continuation of the ongoing range-bound rally
• The coin buyers lose the dynamics support of the 20-day EMA
• The intraday trading volume in the ADA coin is $103.6 Billion, indicating a 104.6% gain.

Source- Tradingview

The ADA/USD price chart displays the bullish reversal from the $0.4 mark within a rising channel pattern accounting for a price jump of 47.5%. However, the recent higher price rejection from the $$0.595 mark accounts for a 22.6% price drop, breaking below the support trendline. 

The price action displays a triple black crow pattern forming in the daily chart struggling to take support at the $0.45 mark. Furthermore, the increase in selling pressure is evident with the spike in intraday trading volume and the long-wick candles. 

The growing bearish influence over the daily chart increases the possibility of a downtrend continuation below the support level of $0.45. Therefore, a short-selling opportunity will arise with the breakdown of the aforementioned support with the potential of a 13% drop to revisit the July low of $0.4 mark. 

On the contrary, a bullish reversal with a lower price rejection from the $0.45 support level might result in a price jump above the 50-day EMA. 

Technical Indicator

DMI indicator: The sudden increase in selling pressure results in a bearish crossover in the DI lines, with a sharp drop in the bullish momentum evident by the ADX line. 

Relative strength index: the daily RSI slope displays a phenomenal increase in the underlying bearishness as it drops below the halfway line and the 14 days average line.

• Resistance levels- $0.5, and $0.542
• Support levels- $0.45 and $0.4