Cardano runs into a resistance zone, can ADA traders anticipate a pullback
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.
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On the price charts, the past few days have seen the price register sizeable gains. The possibility of a sharp pullback for Bitcoin [BTC] threatened the idea of further gains for Cardano [ADA]. Cautious traders can wait for a strong trend to establish and trade in its direction. At the time of writing, the $0.49 region loomed as a strong resistance, while $0.44 and $0.46 were support zones.
ADA- 4-Hour Chart
The four-hour chart formed lower highs over the past two weeks. It broke above the $0.46 mark a couple of days ago. ADA approached a zone of resistance at $0.49, and this level has been key since early August.
Until a trading session closes above $0.49 on the H4 timeframe, the idea would be to sell any retest of the $0.48-$0.49 mark. A dip lower can then be awaited to enter long positions.
Rationale
The one-hour chart and its indicators showed bullish promise in the short-term. While a rejection from $0.48 could occur over the next few hours, the charts also showed the $0.455 region to be a strong support.
The Awesome Oscillator (AO) made higher highs over the previous trading day in response to Cardano’s recovery from $0.43. The Accumulation/Distribution (A/D) line also advanced over the past few days to form higher lows.
The $0.49 resistance zone can be used to take-profits. A dip to the support region (cyan box) can be used as a buying opportunity.
Conclusion
A rejection at $0.49 does not necessitate a sharp plunge. If Bitcoin can climb past the $19.6k mark, ADA can likely climb past $0.49 as well. Given the uncertain market conditions, small position size and low risk (0.5%) would be recommended. $0.49 and $0.51 can be considered resistance zones on a move up.
