Cardano (ADA) moved up a notch on March 25, putting itself on track to make up for much of the losses it had suffered in the first two months of this year.
Cardano: not so optimistic yet?
ADA’s price rose about 7.5% in Friday’s trading, reaching $1.19 in one month after bottoming out at about $0.75. The massive rebound movement of the Cardano token yielded around 60% gains. Nevertheless, it continued to risk losing its upward momentum in the coming weeks.
At the heart of this bearish analogy is a multi-month bearish channel pattern, with a reliable track record of simultaneously triggering and limiting ADA’s rebound attempts since September 2021.
In particular, the channel’s upper trendline has served as an ideal sellout zone and is now being retested as resistance, as shown in the chart below.
ADA/USD daily price chart. Source: TradingView
ADA’s daily relative strength index, now at 71.80, also warns of its “overbought” nature. In a perfect scenario, an RSI above 70 leads to a sell-off in an attempt to neutralize the excessive valuation of the underlying asset. That places the Cardano token at imminent fallback risk to the lower trendline of the bearish channel.
More signs of a possible ADA pullback are coming from the weekly charts. Notably, the Cardano token’s rebound has caused it to test its 20-week (near $1.21) and 50-week (near $1.31) exponential moving averages (EMA) as resistances. They played a key role in capping ADA’s profits in January 2022.
ADA/USD Weekly Price Chart. Source: TradingView
Alex Benfield, Analyst at Weiss Ratings, said ADA is to push back $1.20 as a support, a level that kept its bullish bias intact several times in 2021. He noted that if the Cardano token succeeds, the chances of a rally in the medium term will be higher, adding:
“Until the resistance is clear, this movement is in danger of losing momentum,”
ADA “fundamentally bullish”
Alexander Mamasidikov, co-founder of crypto wallet service MinePlex, believes Cardano’s interim outlook is optimistic, despite overbought risks.
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The executive believes ADA’s continued growth momentum is more fundamental than technical, noting that the token began to rise after it became one of the assets included in Grayscale Investment’s new altcoin fund called Smart Contract Platform. ex Ethereum fund (GSCPxE).
BREAKING: Grayscale Launches ‘Smart Contract Fund’ for $ETH competitors
— Altcoin Daily (@AltcoinDailyio) March 22, 2022
“The growth is testament to how impressed investors are with the revolutionary role of the Cardano blockchain in the fast-growing smart contract-powered evolution of Web3.0,” Mamasidikov claimed, although he agreed that levels near of $1.50 could play spoilers for ADA’s upward move. fragments:
“Based on ADA’s growth trajectory, the $1 price level remains the critical support level, while the currency’s short- to medium-term resistance is pegged at $1.5.”
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