Cardano: not so bullish yet?
ADA’s price jumped by around 7.5% in trading Friday, reaching $1.19 over a month after bottoming out at around $0.75. The Cardano token’s huge rebound move netted around 60% in gains. Nonetheless, it remained at the risk of losing its upside momentum in the coming weeks.
At the core of this bearish analogy is a multi-month descending channel pattern, with a reliable track record of causing and limiting ADA’s rebound attempts simultaneously since September 2021.
The channel’s upper trendline particularly has served as an ideal selloff zone, now being tested again as resistance, as shown in the chart below.
ADA’s daily relative strength index, now at 71.80, also alerts about its “overbought” nature. In a perfect scenario, an RSI reading above 70 leads to selloffs in an attempt to neutralize the underlying asset’s excessive valuation. That puts the Cardano token at an imminent pullback risk toward the descending channel’s lower trendline.
More signs of ADA’s potential pullback move come from its weekly charts. Notably, the Cardano token’s rebound has been having it test its 20-week (near $1.21) and 50-week (near $1.31) exponential moving averages (EMA) as resistances. They were instrumental in capping ADA’s gains in January 2022.
Alex Benfield, analyst at Weiss Ratings, said ADA needs to reclaim $1.20 as support, a level that kept its bullish bias intact multiple times in 2021. He noted that if the Cardano token manages to do so, its likelihood of seeing a medium-term rally will be higher, adding:
“Until it clears that resistance, this move is in danger of losing momentum,”
ADA “fundamentally bullish”
Alexander Mamasidikov, co-founder of crypto wallet service MinePlex, believes Cardano’s interim outlook is bullish despite its overbought risks.
The executive believes that ADA’s ongoing growth momentum is more fundamental than technical, noting that the token started spiking after it became one of the assets included in the Grayscale Investment’s new altcoin fund, dubbed 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 proof of how impressed investors are with respect to the revolutionary role of the Cardano blockchain in the fast-growing smart contract-powered evolution of Web3.0,” Mamasidikov asserted, albeit agreeing that levels near $1.50 could play spoilers to ADA’s upside move. Excerpts:
“Drawing from ADA’s growth trajectory, the $1 price level remains the crucial support level while the coin’s resistance is pegged at $1.5 in the short to medium term.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.