The Cardano market has been moving higher ever since the downtrend observed on 22 April. The value of the ADA has surged by 43% in the past 5 days and has continued to trend upwards. At the time of press, ADA was trading at $1.37 with a market capitalization of $43.99 billion.
Cardano 4-hour chart
Source: ADAUSD on TradingView
Cardano has been witnessing a strong uptrend in the spot market, however, the long-term chart could be pointing toward a fall that could be incoming. This fall could be the result of the strong rally that the asset has been witnessing over the past week.
Ever since the asset hit $1.4, the price has remained a bit unstable as the selling pressure was also rising. This could be attributed to traders who were eager to realize profit while the market was still at a high point.
Reasoning
Bollinger bands were diverging at press time, indicative of increased volatility. However, the signal line was approaching the candlesticks as the selling pressure was emerging in the mid-term. 50 moving average remained under the candlesticks, indicating the rising price of the digital asset.
Since the price was surging for almost a week, buying pressure pushed ADA to the overbought zone. The relative strength index hit 69, at the time of writing, which meant the ADA market was saturated by buying pressure. This made the price unstable and could lead to a fall. Similarly, Chaikin Money Flow indicated that money has been flowing into the ADA market, confirming the high buying pressure in the market.
Critical level
Entry-level: $1.37
Take Profit: $1.29
Stop-level: $1.41
Risk to Reward: 2.02
Conclusion
The current chart of Cardano noted that the consistent buying pressure over the past week caused the asset to hit the overbought zone. At this point, we may see a trend reversal as the price strives to stabilize. Traders can benefit from a short position as the price could drop to $1.29.
