Cardano to the moon and beyond has some caveats attached
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Ready to lead the charge for a variety of tokens dubbed as ‘Ethereum Killers,’ Cardano certainly makes a good case for itself. With scores of projects already in development after the Alonzo hard fork, sentiment is likely to be bullish going forward.
However, ADA seemed to battling against some selling pressure at press time. As highlighted in a previous article, a distribution phase loomed large as investors locked in their profits. This article will take a look at what ADA needs to do to maintain its bullish thesis and negate a bearish outlook.
At the time of writing, ADA was valued at $2.47 with a market cap of $78.89 billion.
Cardano Daily Chart
Despite some lower lows set by ADA over the past week, sellers respected the 38.2% Fibonacci level which hadn’t been breached. If ADA holds on to this trend as some of its indicators reset their positions, the next upcycle would be in effect.
Before Q4 of 2021 concludes, long-term targets at the 138.2% and 161.8% Fibonacci levels could be achievable, provided projects built on the Cardano platform face little to no hiccups.
However, it is imperative for ADA to hold above key levels for this outcome. Moreover, a close below the 50% Fib level and $1.88 would open the floodgates for an extended market decline.
The RSI was in stabilization mode after declining steadily from overbought levels. Such a correction was healthy before ADA kickstarted its next leg upwards. While the MACD has also been easing from record levels, it is yet to close below equilibrium – A good sign.
Finally, the Chaikin Money Flow has seen higher lows since early April. Even though the index threatened to move below the mid-line due to weak capital inflows, it can be expected to bounce back from its lower sloping trendline.
To assert itself above the 138.2% and 161.8% Fibonacci levels, ADA needs to hold above a few key areas. This would allow its indicators to take back bullish positions after selling pressure fizzles out.
Till then, the 38.2% Fibonacci level would be key to ADA’s trajectory.