- Cardano and Solana are down more than 28% over the last week.
- Both Layer 1 tokens are showing buying signals on their 12-hour charts.
- If validated, ADA could recover to $0.55 and SOL to $36.
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Layer 1 tokens Cardano and Solana appear to have reached oversold territory after plummeting in the past seven days. Whether these altcoins can gain the strength to bounce off crucial support remains to be seen.
Cardano and Solana show buy signals
Cardano and Solana appear to be gearing up for bullish rallies after incurring significant losses over the past week.
The seventh largest cryptocurrency by market capitalization is down more than 28% since June 8. ADA recently made a low of $0.44 and is trading around $0.47 at the time of writing. Interestingly, a buy signal formed on the Cardano 12-hour chart, suggesting a potential bounce.
The Tom DeMark (TD) Sequential Indicator recently formed a red nine candle, which is considered a bullish formation. The technical pattern indicates a candlestick rally from one to four that could help Cardano regain lost ground. An increase in buying pressure around the current price levels could trigger a rally to $0.55 or even $0.68.
Still, Cardano needs to hold above the $0.44 support level to have a chance to validate the bullish outlook. Failure to do so could cause an increase in the sell orders that ADA sends to $0.37.
Solana has also suffered from the cryptocurrency market crash. It took a 38% hit over the last week to hit a recent low of $25.80. Although the losses incurred are significant, the RSI shows a bullish divergence, anticipating that SOL may rebound.
The TD setup adds credence to the bullish outlook after presenting a buy signal on the 12 hour SOL chart. He developed a red nine candle, which could lead to a rise of one to four candles. But to do so, Solana needs to close above $31.
Cutting such an important resistance level could give SOL the strength to rally towards $36 or even $40. However, Solana should stay above $26 because breaking below this support level can lead to a drop to $21.
It is worth noting that the US Federal Reserve is expected to raise interest rates later today. These events tend to create a lot of volatility in the global financial markets, including the cryptocurrency market, so caution is advised.
Disclosure: At the time of writing, the author of this article owned BTC and ETH.
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