Cardano (ADA) price initially collapsed from a critical horizontal support area But they finally get it back after several failed attempts.
Readings from the weekly and daily timeframes indicate that ADA price has started a long-term bullish reversal that will continue in the near future.
Cardano can’t sustain the increase – it falls to support instead
The technical analysis done on ADA for the weekly time frame reveals that the price of ADA saw a breakout from the long-term descending resistance line in early January. This line of resistance had been in place for over a year, so the breakout was expected to result in a significant upward movement.
However, contrary to expectations, ADA price returned to the descending resistance line twice after the breakout. This correction validated the line as a support level both times (green icons). The second rejection also marks a new yearly low.
The last verification took place on June 15th and coincided with a rebound at the $0.25 horizontal support area. Currently, ADA price is trading just above this horizontal support area.
The weekly relative strength index (RSI) provides an inconclusive reading. Traders use the RSI as a momentum indicator to determine whether the market is overbought or oversold and to make decisions about whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is bullish it indicates that the bulls still have the advantage. Conversely, if the reading falls below 50, the opposite is true.
Although the RSI is rising, it is still below 50, which indicates an indefinite trend.
ADA Price Prediction: Will the Breakout Continue?
A closer look at the daily time frame price action shows a bullish outlook for ADA price. There are several reasons for this.
First, the price action shows that the ADA broke out from a short-term bearish resistance line. The line had previously been in place since April 13. So, its breakout is a crucial bullish sign.
Secondly, the price reclaimed the $0.29 area. The fact that it did so after a failed breakout aligns with the breakout from the resistance line.
Finally, the daily RSI is above 50 and increasing.
However, it is worth noting that the $0.38 resistance area rejected the price and is in the process of forming a bearish candle. However, there are several hours left until the daily close, so the price could reverse its short-term decline and move above $0.38.
Despite this bullish prediction for ADA price, failure to close above the $0.38 resistance area could lead to another drop to the $0.29 support.
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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.