Cardano (ADA) price has shown positive performance in 2023, driven by positive Cardano news related to the launch of Z. However, a short-term correction is on the horizon.
Launched on January 31, the algorithmic stablecoin Djed is a huge step forward for the Cardano blockchain platform.
Djed is community driven and has a mechanism for overcollateralization of 400%-800%. It is pegged to the US dollar, backed by ADA and has SHEN as its reserve coin.
If the reserve ratio falls below 400%, it will not allow minting or burning of SHEN and minting of Djed. If it goes above 800%, users will be unable to mint SHEN. The minimum minting and burning amounts for Djed are 5,000 and 1,000 respectively.
However, ADA, the native token of the Cardano network, did not react to the launch, posting an increase of less than 1%.
Cardano starts to lose steam
Cardano price has broken out in 2023, surging 67% at one point. It broke a descending resistance line and reached a high of $0.400 on January 30.
However, ADA price formed a bearish engulfing candlestick the next day, potentially indicating that the upward movement is complete. Furthermore, the decline has confirmed bearishness on the daily RSI.
As a result of these bearish readings, a downward movement could happen soon. If this happens, ADA token price could retest the $0.328 horizontal support area.
On the other hand, the main resistance area is at $0.417. A daily close above this would indicate a continuation of the upward momentum and could reach as high as $0.55.
Cardano Price Prediction for February: The Uptrend Is Done
Technical analysis from the shorter-term six-hour time frame favors a continuation of the downtrend. As a result, it gives a bearish Cardano price prediction for February.
Cardano price has completed a five-wave upward movement, in which wave five was the final diagonal, as evidenced by the shape of the wedge.
Break of the wedge would confirm that this is the correct count and start a downside move towards the 0.382-0.5 Fibonacci retracement support level at $0.319-$0.338. A correction could take place for most of February, while a wedge breakdown could happen during the next 24 hours.
On the other hand, a decisive close above the wedge would invalidate this bearish Cardano price prediction. As mentioned earlier, it could start an upside move towards $0.55.
To conclude, the ADA price forecast for February is bearish. A decline towards the $0.319-$0.338 area is expected. A daily close above $0.39 would invalidate this bearish forecast and could lead to a move towards $0.55.
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