Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
After its third attempt in over a week, Cardano finally closed above the $2.96 price ceiling and formed a new ATH above $3. Some additional targets were plotted using the Fibonacci Extension tool, while emphasis lay on a few support lines in case of a retracement.
At the time of writing, Cardano was valued at $3.05 with a market cap of $98.2 billion.
Cardano Daily Chart
Source: ADA/USD, TradingView
ADA has not disappointed on the charts since its price picked up from a monthly low of $1 in late July. Since then, ADA’s value has increased by a staggering 205% – The highest gain percentage among the top 10 coins by market cap. Buyers have preserved ADA’s trajectory by snapping higher lows consistently for over a month. This is why ADA was backed to eventually close above its ascending triangle setup and the $3 price level.
The Fibonacci Extension tool was plotted on ADA’s impulsive retracement from $2.96 to $2.47, which took place last week. This identified important target areas at the 50% and 61.8% Fibonacci levels. A greater emphasis was placed on the latter Fib level as this seemed to be a viable take-profit from ADA’s bullish pattern.
When sellers do drive the price south, the first line of defense would lie at the newly flipped $2.96 zone. In case of a sharper sell-off, support lines at $2.70 and $2.46 would look to crunch selling pressure.
Reasoning
The MACD accurately charted ADA’s recent trajectory. Bearish momentum has been gradually receding over the past few days, with the same transpiring into a bullish crossover. The On Balance Volume also captured the hike in buying pressure and traded at multi-month highs. Such highs were last observed when ADA traded at $2.46 in mid-May, just before the wider crypto sell-off.
Meanwhile, the RSI pierced above the overbought territory and could trigger a near-term market decline. However, a close above the 38.2% Fibonacci level would likely push RSI deeper into the upper zone.
Conclusion
Now that ADA has closed above $2.96, traders can set their sights on some important price levels. Over the course of the next week, the 61.8% Fibonacci Extension level would be the next point of contact from where traders can exit their positions.
Meanwhile, the market is also vulnerable to an immediate throwback to $2.96 due to the RSI’s overbought nature.
