Cardano (ADA) has cleared the trend line resistance that has kept the price below it for over four months. The cryptocurrency, currently the ninth biggest by the market cap of $2.17B, has gained almost 4% percent in today’s training. As evidently depicted on Graph 1 below, the ADA is now trading comfortably above the trend line (the orange line), and approaching the next form of resistance. The price rebounded from the 127.2% Fibonacci extension, the first big support, as the return to retesting the previous breaking point (from which we start measuring Fibonacci retracement) is back in the cards.
Graph 1. Cardano daily chart (ADABTC)
Before we take a look at the obstacles the bulls are facing, let’s place our focus on Graph 2 and analyze the break of the trend line. The zoomed-in chart represents the perfect example of the Breakout Strategy. The formation is complete once the price breaks a major resistance/support with an impulsive move. The move suggests a commitment from “real money” to push the price, and the fact this is occurring at an important high/low adds additional weight to the move. In this example, the ADABTC breaks the trend line resistance, closes comfortably above it on the H4 chart, and then rotates back lower to retest the former resistance, which is now acting as support. The touch on the broken trend line initiates a reaction as more bulls join in to push the price in the initial direction.
Graph 2. Cardano H4 chart (ADABTC)
So, where do we go next? If the break holds and Cardano continues to march higher, the first big tests are the confluence of horizontal resistance (former support), and the 100 DMA, sitting around 0.00016. The potential move above the first level of resistance will bring the currency, which is facing a major resistance in this case, a bull/bear line that could define the long-term price movement in the ADABTC. The major zone consists of the 200 DMA and the upward heading trend line which has acted as support currently sits at around 0.000019. In general, the price action in ADABTC looks bullish, at least short-term, as long as we stay above the broken trend line.Leave a comment