Cardano traders could long the alt here
After surging by over 25% in the last five days, Cardano prices looked to take a breather as sellers returned to the market. Triggered by BTC’s decline below $37,000, ADA prices moved south and eyed key developments to initiate its next leg upwards. At the time of writing, ADA traded at $1.25, down by 9% over the last 24 hours.
Cardano Hourly Chart
Yesterday’s rise saw ADA break north of its ascending channel and trade above its 38.2% Fibonacci Extension level ($1.31) for the first time in 15 days. However, buying pressure eased before ADA snapped the $1.40 mark and a correction soon followed which dropped prices towards the lower trendline of their pattern.
The last few hours did result in a series of green candles and there was a chance that ADA would extend its gains over the coming sessions. In such a case, ADA bulls would eye a push towards the $1.31-$1.35. However, a close above $1.28-resistance and 20-SMA (red) was needed to validate such an outcome. This area also clashed with the half-line of ADA’s pattern.
Reasoning
Relative Strength Index saw a bounce back from the oversold zone as some buying pressure returned to the market. The Directional Movement Index’s +DI inched closer to the -DI and a bullish crossover would indicate the onset of another uptrend. Squeeze Momentum Indicator noted receding bearish momentum and a buy signal can be placed once the index closes above the equilibrium-mark.
Conclusion
Since the above mentioned indicators were yet to fully back a bullish trend, it seemed rather premature to call for an immediate reversal in prices. Traders could choose to forego some gains by longing ADA only once it closes above $1.283 as this would heighten chances of a swing to the upside. In this scenario, take-profits can be set between $1.31-1.35 which would highlight gains of 3%-5.5%.
