Key Takeaways
- Cardano’s weekly chart has been bearish, with on-chain metrics highlighting dwindling activity. And yet, the momentum shift on the 1-day timeframe could see the token rally to the $0.68 supply zone.
Cardano [ADA] has been slowly trending higher on the price charts. Since the low made at $0.536 towards the beginning of July, the altcoin has gained by 17% on the charts, trading at $0.626 at the time of writing.
However, bulls shouldn’t celebrate too early.
Source: ADA/USDT on TradingView
The weekly chart revealed that the price had retested the 78.6% Fibonacci retracement level at $0.535 in mid-June. Since then, it has climbed higher, but the weekly market structure was still bearish at press time.
In fact, evidence for this came from the series of lower highs and lower lows ADA has formed since December.
And yet, investors can remain hopeful of a recovery so long as the 78.6% level remains a support. If it is flipped to resistance on the weekly charts, the price could fall by another 30%-40%.
ADA price prediction bullish in the short term?
Source: ADA/USDT on TradingView
Examining the 1-day chart, AMBCrypto found that a bullish structure was in place in this timeframe. The price formed higher lows and higher highs over the past two weeks. At the time of writing, Cardano had climbed past $0.62 – The 50% retracement level. The RSI crossed above the neutral-50 mark too.
This indicated a momentum swing from bearish to bullish. Similarly, the OBV also crept higher. Its uptrend over the past two weeks indicated steady demand, one that might be a bullish sign that ADA could climb higher.
To the north, the 78.6% retracement level at $0.684 emerged as a crucial resistance. This level was enveloped by the fair value gap (white box) from June, marking it as a key supply zone. A Cardano rally beyond $0.68-$0.7 would be a strong sign of bullish conviction.
Finally, on-chain metrics suggested that this conviction was absent. The development activity has slowly trended lower since February. Once known for its high dev activity, the dropping rates could concern investors. The 180-day circulation underlined reduced on-chain activity, alongside the muted daily active addresses.
The falling circulation hinted at a slide in unique ADA transactions. The daily active addresses have been lukewarm since March. Until organic demand makes its way into the market, a Cardano recovery would be difficult.
Therefore, traders can expect a move to $0.66-$0.68, especially if the Bitcoin [BTC] trajectory remains bullish. A breakout past the $0.68 resistance would be difficult indeed, and traders and investors could look to stay sidelined until ADA manages to break out beyond that supply zone.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
