Cardano has been unable to puncture through the $2.96 price ceiling but prices have respected an upwards sloping bottom trendline. As buyers eye a third retest of what is shaping up to be a stubborn resistance, an upwards breakout seemed likely, especially due to consistent higher lows.
Sentiment was also favorable with Hoskinson providing confirmation of the final testnet launch on 1st September. However, ADA’s indicators formed bearish setups and presented some hurdles moving forward. At the time of writing, ADA traded at $2.84 with a market cap of $90.81 Billion.
ADA 12-hour Chart
Source: ADA/USD, TradingView
Steady higher lows have been snapped at regular intervals ever since ADA broke north of $1.88 in mid-August. Prices have followed the same pattern leading up to last-week where sellers reigned in at $2.96. While this ceiling did already trigger two rounds of selling pressure, buyers hit back with higher lows.
An ascending triangle formed in the process which projected an upwards breakout. Calculating ADA’s retracement from the highest to the lowest point of the pattern set the price target at $3.40, which was another 18% hike from its press time level. To invalidate this outcome, sellers would first need to form a lower low below $2.70. Moreover, a close below $2.46 would stimulate additional drawdowns in the market.
Reasoning
While ADA’s indicators were yet to fall in bearish territory, it was hard to overlook these warning signs. The Relative Strength Index was still easing after trading in the overbought zone just a week ago. What was worrying is that the indicator traded within a descending triangle and threatened to break loose. Such an observation was also noted on the Awesome Oscillator, which formed two lower peaks and signaled an incoming wave of selling pressure. Meanwhile, the Directional Movement Index was close to a bearish crossover. However, the same has been negated on two occasions and bulls were expected to overcome this signal once again.
Conclusion
ADA seemed to be building up towards an ascending triangle breakout in the coming days. A 15% hike from the upper trendline would thrust ADA towards a new ATH at $3.40. However, it was not easy sailing for the bulls. Bearish formations were noted on a few of ADA’s indicators which could trigger a downwards push. Hence, traders must play safe and wait for a breakout confirmation above $2.96 before going long.
