What can bulls do when Cardano skims above $0.36
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
In mid-April, Cardano [ADA] faced rejection from the $0.46 highs. The inability of the bulls to defend the $0.4 support meant the price has trended downward for the past month. This saw a change over the past week.
The market structure on the daily timeframe had been bearish but was recently flipped to bullish. But worryingly for the bulls, a good chunk of May was spent defending the $0.36 support. This did not point toward strong buyers.
Cardano has defended the 61.8% retracement level so far
This break in market structure happened on 28 May, when ADA bulls forced a daily session close at $0.383, above the recent lower high of $0.3807. Yet, the volume bars showed that the trading volume was barely average.
Moreover, the OBV was limping along a line of support from January. This line has been retested by the OBV multiple times in 2023, but at the time of writing, it looked to be on the verge of sinking lower.
The fact that the OBV was in a slow decline highlighted the lack of demand behind Cardano. Therefore, even though the Fibonacci retracement level at $0.36 has been defended in May, a Cardano rally was not yet likely.
To reinforce this possibility, the RSI struggled to climb above neutral 50 since mid-April. This showed bearish momentum has been prevalent, although the momentum was neutral at the time of writing.
The rising mean coin age could inspire confidence in Cardano investors
The development activity behind Cardano has been steady over the past few months. Apart from the steep drop during New Year’s, this activity has not seen large swings upward or downward. This would be seen in a positive light by long-term ADA holders.
Realistic or not, here’s ADA’s market cap in BTC’s terms
The mean-coin age of the token has also trended upward in May, despite the lackluster price action. Due to the lack of trend in May, the 90-day MVRV ratio also floundered in the negative territory.
The conclusion is that holders are at a minor unrealized loss, but the rising mean coin age boded well. Bitcoin [BTC] would need to rise on the price charts to fortify bullish sentiment across the market, which could then see Cardano’s rally. But investors must be prepared for a drop beneath the $0.36 support for ADA as well.