The Cardano (ADA) price has broken out from long- and short-term diagonal resistances. This is a sign that it has begun a new bullish trend.
However, while short-term readings support the continuing increase, long-term ones are still undecided, failing to confirm the bullish trend reversal.
Cardano Attempts to Continue Previous Increase
The technical analysis performed on ADA for the weekly timeframe indicates that in early January, the ADA price broke out from a descending resistance line that had been in place for more than a year. This breakout was expected to lead to a significant upward movement.
Contrary to predictions, the ADA price retraced and returned to the descending resistance line on two occasions after the breakout (green icons).
This is a common movement after breakouts. While the second return resulted in a new yearly low, it also created a very long lower wick. This is a sign of buying pressure. The ADA price has increased since.
The weekly Relative Strength Index (RSI) is inconclusive. The RSI is a momentum indicator used by traders to determine if a market is overbought or oversold and to make decisions about buying or selling an asset.
An RSI reading above 50 suggests that bulls still have an advantage and an upward trend. Conversely, if the reading falls below 50, the opposite is true.
Despite an increase in the RSI, the indicator remains below 50, a sign of an uncertain trend at the moment.
ADA Price Prediction: Is the Breakout Legitimate?
Taking a closer look at the daily timeframe price action reveals a positive outlook for the ADA price. There are several reasons to support this view.
To begin with, ADA experienced a bullish breakout from a short-term descending resistance line, which had been in place since April 13. This breakout is a clear and decisive bullish signal.
Additionally, the price successfully reclaimed the $0.30 area, especially after a failed breakdown, which aligns with the significance of the breakout from the resistance line.
While the price fell after the breakout, it validated the resistance line and the $0.30 area as support before bouncing (green icon).
Furthermore, the daily Relative Strength Index (RSI) is currently above 50 and is on an upward trajectory, indicating bullish momentum.
Despite the bullish price prediction, if ADA closes below the $0.30 horizontal area, it will invalidate the bullish hypothesis. In that case, the price could fall to $0.25.
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Disclaimer
In line with the 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, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.
Source: https://beincrypto.com/cardano-price-bounces-retesting-resistance/