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  • Cardano price will meet strong resistance near $1.20.
  • 50 twelve-hour simple moving average (SMA) has turned down for the first time since December 2020.
  • Head-and-shoulder top pattern fortifies the bearish outlook.

Cardano price is trading heavy in the context of a developing head-and-shoulders top. Based on price symmetry, traders should expect a drift higher over the next 2-3 days before ADA breaks below the neckline.

Cardano price risk greatly outweighs reward  

Only six days ago, ADA was near the all-time high and looked primed for a solid breakout to at least the 1.618 Fibonacci extension level at $1.79. A wave of doubt has overcome the cryptocurrency and forced it below the 50 twelve-hour SMA at $1.17, creating the right shoulder of the head-and-shoulders top.  

A break below the neckline at $1.08 will find actionable support at the 100 twelve-hour SMA at $1.02 and the psychologically important $1.00 level. Additional support should materialize at the 0.382 Fibonacci retracement level at $0.95.

The bearish path for ADA will soon lead to the 0.50 retracement level at $0.78, which is slightly below the February 23 low at $0.80, and the hammer close on February 15 at $0.84. It will be formidable support and represent a 28% decline from the neckline.

ADA/USD 12-hour chart

ADA/USD 12-hour chart

Cardano price should drift higher over the next 2-3 days, but a close above the left shoulder at $1.16 on a 12-hour candlestick will void the head-and-shoulders pattern and reset traders’ sights on a new all-time high. After clearing $1.485, bulls have the opportunity to rally ADA to the 1.618 Fibonacci extension at $1.79.

The 5th ranked cryptocurrency by capitalization is highly speculative. Hence, traders need to be precise in taking their entry points to ensure there is some space to manage the volatility and avoid triggering their stops too early.