What is behind the 25% increase in the price of Cardano (ADA)
Date: 2023-07-16 Author: Karina Ziganova Categories: IN WORLD
The price of Cardano (ADA) broke through the critical horizontal support area, but was eventually able to gain a foothold above it after numerous unsuccessful attempts.
Indicators on the weekly and daily timeframes indicate that the price of ADA has started a long-term bullish reversal that will continue in the near future.
Cardano did not stay on top
June turned out to be a difficult month for the native token of the Cardano project due to the repressive measures of the Securities and Exchange Commission (SEC), which declared ADA a security, and the subsequent delisting of the coin by Robinhood and Bakkt
However, yesterday it became known that the court ruled in favor of Ripple Labs in a protracted case initiated by the SEC back in 2020. In fact, the court recognized that XRP is not considered a security. This decision, as many participants in the crypto market hope, can set a precedent for other cryptocurrencies recognized by the SEC as securities, and generally bring the end of the crypto winter closer.
As the results of the technical analysis of the weekly chart show, in early January, the ADA price broke through the long-term descending resistance line, which was more than a year old. For this reason, it was expected that such a bullish breakout would provoke significant growth.
However, contrary to expectations, after the breakthrough, the ADA rate returned to this downward line twice. Both times, the market tested it for strength as a support level (green icons). At the same time, for the second time, the price formed a new annual low. In addition, the token rebounded from the horizontal support area of $0.25. Currently, ADA is trading just above this horizontal support area.
The weekly Relative Strength Index (RSI) gives contradictory signals. Despite the growth, it remains below the 50 mark. This suggests that the market cannot decide on the direction of the trend.
ADA Prediction: Will the Bulls Develop a Breakout
The shorter daily timeframe reflects the bullish outlook for ADA. There are several reasons for this.
First, price dynamics demonstrate that the token has made a bullish breakout of the short-term downward resistance line. This line has existed since April 13. Therefore, its breakout is an important bullish signal
Secondly, the price recovered above $0.29 after a false bearish breakout, which is consistent with the breakout of the resistance line.
Finally, the daily RSI is above the 50 mark and is rising.
However, it is worth noting that the ADA rate has bounced off the $0.38 resistance area and is in the process of forming a bearish candle. There are still a few hours left before the close of the day, so the price still has a chance to turn around after a short-term drawdown and rise above the $0.38 mark
Despite this bullish outlook, ADA's failure to close above the $0.38 resistance area could lead to another decline towards the $0.29 support level.
