Bitcoin’s steady rise from $30,000 was the primary catalyst for most altcoins that witnessed a period of steady growth recently. Cardano’s price also reflected bullish sentiment as the digital asset rose from a value of $1 to $1.25 in the last four days alone. At the time of writing, Cardano traded at $1.23, up by 2% over the last 24 hours.
Cardano Daily Chart
ADA’s daily chart highlighted a descending channel breakout and gains amounted to nearly 9% from the upper trendline of the pattern. The next resistance mark lay at $1.25 which also coincided with the 20-SMA (red).
Stabilization on the cards?
ADA’s move above its up-channel saw prices climb back above their daily 200-SMA (green) but the same occurred on low volumes. This lowered the chances of ADA trending higher over the coming days. Instead, prices could settle between a channel of $1.19-$1.25 in the coming days before continuing an upwards trajectory. Failing to close above $1.25 in the next 24 hours would confirm such an outcome.
Despite ADA’s sustained rise, its Relative Strength Index was still below 50 and bulls were yet to assume control of the market. This has been the case since the market plummeted on 19 May. Directional Movement Index did converge but the -DI maintained above the +DI as a bearish trend was yet to be overturned.
Moreover, ADX pointed south and a move below 25 would denote some lateral movement. Squeeze Momentum Indicator did register a decline in bearish momentum but the same was still below the half-line. As the indicators develop a clearer direction, prices could remain constricted and if bulls prevail ADA’s next target was at $1.33 and the 50-SMA (yellow).
ADA could see a period of sideways movement between $1.19-$1.25 over the coming days as bulls prepare for an upwards breakout. Meanwhile, traders can go long once ADA touches the lower end of this range and exit their positions once prices touch the $1.33 upper ceiling. However, one must also be cautious of some minor losses as the overall trend was still bearish.
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