Cardano (ADA) is attempting to break away from the descending channel, marked yellow on the following chart, which would place its price within a range between the critical support ($2) and resistance ($2.4) levels.
Until ADA breaks away out of this range, we can expect its price to continue the volatile consolidating between these levels.
Key Support level: $2
Key Resistance level: $2.4
Trading Volume: Volume remains low, particularly over the weekend; however, the break above the descending channel was followed by a decent amount of volume, indicating that buyers still show heavy interest in ADA.
RSI: The RSI remains bearish on larger timeframes (daily and weekly). On the weekly timeframe, the RSI has been forming lower highs since February 2021. This is bearish.
MACD: MACD just went through a bearish cross on the weekly timeframe. This is not a positive sign for the bulls, as it can take at least two months for the price to resume its uptrend, compared to the recent weekly bearish cross.
On the daily timeframe, the MACD is relatively flat, indicating price can consolidate in the stated range for some time before a break, which matches the above trading range of $2 – $2.4.
Short-term Bearish: ADA has formed a substantial bearish divergence on the weekly timeframe between price and RSI. While the price went through higher highs, lower highs took place on the RSI (shown below, the yellow arrows).
This indicates buyers should be cautious regarding ADA/USD right now, especially considering that the MACD did a weekly bearish cross on its moving averages.
Until this reverses, it is a bit difficult to stay bullish on ADA’s short-term.
Nevertheless, as long as ADA maintains a price above $2, there are good chances its price can eventually reach higher levels, taking advantage of the bullish sentiment of the crypto markets – especially in the large-caps such as BTC, ETH, and DOT.
Expect ADA to move between $2 and $2.4, forming a clear price range. When ADA’s price breaks out – above or below these levels – then a fast reaction from bulls or bears can be expected, leading to a significant price move in that direction.
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