Cardano (ADA) has recently been showing signs of a potential trend reversal. But after posting an impressive 48% rally from its June low, ADA price is facing critical hurdles to consolidate its bullish stance.
Cardano (ADA) Price Analysis
The patience of Cardano fans has been tested as the price of ADA has been navigating through a series of ups and downs. After dropping to $0.221 in June, Cardano embarked on an impressive 48% rally, driven in part by positive sentiment stemming from the legal dispute with the US Securities and Exchange Commission. During this period, the price rose to the 61.8% Fibonacci retracement level, which sparked excitement among the bulls.
However, enthusiasm soon waned as the long side struggled to settle above the 200-day moving average (blue). ADA later corrected back to the crucial breakout level at $0.30, as the bulls regained ground and lifted the price above the 50 (orange) SMA.
Bullish ADA price targets
In order to brighten up the short-term outlook, the ADA needs to overcome some important hurdles. The first major resistance is at the 38.2% Fibonacci retracement level, found at $0.328. A successful push beyond that level could open the way for an attack towards the $0.355 mark, where the 200-day exponential moving average presents its biggest challenge.
However, perhaps an impulse from the broader crypto market, Bitcoin, or more positive news from Ripple’s legal battle with the SEC is required for this. Only when the buy side can retake the 200-day moving average at the daily closing price, the probability of a near-term trend reversal increases significantly.
A sustained breach of the 61.8% Fibonacci retracement level at $0.38 is necessary for a real bullish trend reversal. This achievement will increase the probability of revisiting last week’s high. Therefore, a break above the critical area between $0.361 and $0.38 would be a reversal of the bulls’ trend.
If successful, ADA price could head to the local high of $0.399. After that, the next target becomes the 78.6% Fibonacci retracement level at $0.415. Here, the fate of Cardano’s upward trajectory will be decided, with a potential push towards the April 15 yearly high of $0.463. However, wise investors should be ready to take profits if ADA gets close to this level.
After this point, a continuous bullish scenario opens up possibilities to target the local high on September 10, 2022 at $0.524. And if the bullish momentum remains strong, the August 2022 high of $0.590 could become the next target.
Descending price targets
While the upward trend is evident, a sustainable market structure change is not yet confirmed. The bears showed their presence on July 15, as they kept the price of ADA below the “bear line” represented by the 200-day moving average. However, the recent correction of 21% has seen the buy side regain control, at least for the time being.
To start another sell-off, the bears need a daily close below the 50-day moving average at $0.311. Until that happens, the bulls can feel relatively safe in their positions. Failure to do so could lead to a retest of the support area between $0.30 and the 23.6% Fibonacci retracement at $0.296, with potential for a further correction towards the $0.266 support area.
The RSI initially rose to 72 but has since settled in the neutral territory at 54. Generating a new buy signal will be crucial for a massive price increase, as an overheating RSI usually accompanies large spikes. On the positive side, the MACD triggered a new long signal by crossing above the zero line, which added to the short-term optimism.
Featured image from iStock, chart from TradingView.com