Identifying whether Cardano has the legs to hold a position above $3
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The last few days have seen ADA combat some bearish divergences and an overbought RSI to resume its northbound run. Its price, at press time, was 21% higher than its May all-time high. What’s more, the indicators suggested that there is more room for growth before the next correction.
At the time of writing, ADA was trading at $2.85 with a market capitalization of $84.24 Billion.
Cardano 4-hour chart
ADA’s progression on the 4-hour chart was slightly more clear as opposed to the daily chart, which pictured an almost 90 degree hike. On the lower timeframe, ADA has climbed steadily since early August while maintaining its higher highs and higher lows. Resting grounds formed at $1.88, $2.38, and $2.80, levels that have allowed ADA to stabilize before shooting north.
Going by this trend, ADA’s current consolidation around $2.8 has paved the way for another price swing and the $3-mark looked like a surety. A few targets lay at the 161.8% and 200% Extensions. However, the biggest question was this – Whether ADA has the legs to continue its ascent above $3?
Short answer – It is very likely.
Even though the Relative Strength Index was close to overbought levels, an ascending triangle formation presented chances of further upside above $3. Moreover, the Awesome Oscillator formed a higher peak and suggested that buyers were actually growing in number at various price points. Such a development was also observed on the MACD, but a bearish crossover did present a few near-term risks.
To initiate drawdowns, sellers would need to target a close below $2.70 and the 20-SMA (red). On the contrary, a low formed anywhere below $2.37 would be even more threatening. Naturally, this would trigger breakdowns on the aforementioned indicators as well.
As ADA eyes the $3-mark, the spotlight is on the 161.8% and 200% Fibonacci Extension levels moving forward. If sellers do trigger retracements, the price will need to hold a position above $2.37 to preserve ADA’s bullish thesis.