Cardano (ADA) is at a critical point as it tests key resistance levels. The question remains: will the bulls push for a breakout, or is a retracement on the horizon?
Cardano Tests Limits After Massive Rally
Between early November and December, ADA experienced a remarkable 270% rally before reversing near its long-term trend resistance. Despite this pullback, the altcoin’s price action has remained well above its 20-day, 50-day, and 200-day Exponential Moving Averages (EMAs), signaling a strong bullish advantage.
As market sentiment continues to shift, ADA’s short-term price fluctuations could offer lucrative opportunities for traders.
Can ADA Maintain Its Bullish Momentum?
Cardano has sustained its bullish sentiment by remaining above key moving averages, reaffirming its strong position despite ongoing consolidation.
At the time of writing, ADA appears to be trading near a "bull flag" setup on the daily chart. Closing above the $1.03 resistance level could confirm a breakout, potentially paving the way for the bulls to target the $1.21 zone near the long-term trendline resistance.
On the flip side, a breakdown below the $0.80 support level could negate the bullish trend. A decline below this threshold might pull ADA toward the 200-day EMA at $0.62.
Technical Indicators Show Slight Bullish Bias
The Relative Strength Index (RSI) currently hovers around 52, indicating a moderate bullish momentum. If RSI holds above the midline, it could enable buyers to challenge immediate resistance in upcoming sessions.
ADA’s 24-hour trading volume surged to over $1.7 billion, representing a 12% increase in price over the past day. Increased trading volume typically creates favorable conditions for short-term trading setups.
Derivatives Market Data Shows Growing Interest
Recent data reveals that ADA’s Open Interest on the derivatives market rose by 16.63% to $739.86 million, signaling an influx of new positions.
While the overall 24-hour long/short ratio remains neutral at 0.9755, exchange-specific ratios, such as Binance’s ADA/USDT at 2.6127, highlight a significant bullish bias among certain traders.
Bitcoin’s Influence Remains Key
Given ADA’s high correlation with Bitcoin, any unexpected movement in Bitcoin’s price action could significantly impact Cardano’s short-term trajectory. Monitoring broader market sentiment will be critical in determining ADA’s next steps.
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