Cardano price saw a notable rise over the past 24 hours, climbing nearly 10% amid a spike in trading activity. This rally is supported by increased demand for the altcoin, reflected in its increased trading volume. This amount exceeded $1 billion during the reporting period.
Technical analysis suggests that if buying pressure is maintained, Cardano price could regain its two-year high of $1.32. Here’s how.
Cardano Nears Breakout of a Bearish Pattern
BeInCrypto’s assessment of the ADA/USD one-day chart shows that Cardano has been trading in a descending triangle since December 3, when it climbed to a two-year high of $1.32. This downtrend forms when the price of an asset makes a series of lower highs while maintaining a horizontal support level. This indicates a spike in selling pressure as traders offload their holdings to make gains.
However, the resurgence in demand for ADA over the past 24 hours has pushed its price towards the upper line of the descending triangle, potentially positioning it above. When an asset’s price approaches the upper line of a descending triangle, it signals a potential retest of resistance in a bearish continuation pattern. A successful break above this line would signal a bullish reversal and confirm the strength of the uptrend.
According to the readings of the ADA daily chart, this breakout could occur as soon as the buying pressure intensifies. For example, the coin’s Elder-Ray Index returned a positive value for the first time since December 13, further confirming this bullish outlook. At the time of writing, the indicator stands at 0.057.
An asset’s Elder-Ray Index measures the strength of its rises and falls in the market. As with ADA, a positive value indicates bullish pressure, suggesting that buyers are dominating and driving prices higher.
Additionally, ADA’s MACD line (blue) is about to break above its signal line (orange) at press time. This pattern indicates a potential bullish crossover, signaling increasing bullish momentum in the asset’s price. This suggests that buying pressure is gaining momentum and is often interpreted as a harbinger of an upward price trend.
ADA Price Prediction: Will It Break Out or Pull Back?
ADA is trading on the upper line of its descending triangle at $0.92 as of this writing. The strengthening buying activity suggests a potential breakout above this critical resistance level, which could propel Cardano price towards a two-year high.
However, a failed attempt to breach the $0.92 resistance could reaffirm the downtrend, erasing ADA’s recent gains. In such a scenario, the price could fall to the $0.84 support level, invalidating the bullish outlook.
Disclaimer
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