Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
Cardano [ADA] saw massive capital inflows while its trading volumes witnessed a massive jump of over 300% in the last 24 hours. Furthermore, an approximate 33.9% surge in the total value locked over the last day marked a substantial uptick in the network’s DeFi activities.
Unlike most of its peers, ADA was one of the few coins to bag double-digit 24-hour gains out of the top 50 cryptocurrencies as per CoinMarketCap.
After overstretching below its EMA ribbons, the recent developments helped ADA crawl back above the 20 EMA barrier. At press time, ADA traded at $0.6595, up by 26.45% over the last day.
ADA Daily Chart
Source: TradingView, ADA/USDT
The previous correction from the 20 EMA resulted in a 55.13% decline from 5 May on ADA’s chart. Consequently, after falling below its Point of Control (POC, red), ADA glided south toward its 15-month low on 12 May.
After falling toward the $0.47-baseline, the altcoin formed a bearish pennant on the daily timeframe. Post an expected patterned breakdown, the bulls quickly stepped in and structured a morning star candlestick setup.
As a result, on its way up, ADA snapped off the 23.6% Fibonacci resistance and pierced through the EMA ribbons. The high buying volumes reinforced the buying edge while provoking bullish engulfing candlesticks on the chart.
With the 20 EMA finally looking north after months, the buyers could aim to reduce the gap between these ribbons and continue their gradual recovery. A close above $0.66 resistance would underpin the buying efforts to test the $0.71-$0.73 range in the coming times.
A fall from immediate resistance would find support near the 23.6% level before the buyers continue their quest to reclaim a spot above the EMA ribbons.
Rationale
Source: TradingView, ADA/USDT
The Relative Strength Index suggested a buying edge in the current market dynamics. The buyers managed to topple the midline resistance after nearly two months.
However, the OBV still faced the same resistance level that it faced during its previous slump. Any reversal from this level would affirm a weak bearish divergence with the price.
Conclusion
The morning star candlestick setup induced bullish engulfing candles and the high buying volumes have given buyers a visible edge.
In case ADA closes above the $0.66-level, the $0.71-$0.73 range near the 38.2% level could pose recovery hurdles. To enter calls, however, the investors/traders must watch out for the negation of threats on the OBV to minimize their risk.
Finally, ADA shares a high correlation with the king coin. Thus, traders/investors should keep a close watch on Bitcoin’s movement to make a profitable move.
Source: https://ambcrypto.com/cardano-ada-should-you-buy-more-the-technical-answer-might-amaze-you/