Cardano (ADA) price saw a notable surge on Thursday (2), rising nearly 10% amid a spike in trading activity. This rally is supported by increased demand for the altcoin, reflected in its increased trading volume, which surpassed $1 billion during the period under review.
Technical analysis suggests that if buying pressure is maintained, ADA could reclaim its two-year high of $1.32. Here’s how.
Cardano Nears Breakout of Bearish Pattern
The daily chart of the ADA/USD pair shows that Cardano has been trading within a bearish triangle since December 3, when it reached a two-year high of $1.32.
This bearish pattern forms when an asset's price makes a series of lower highs while holding a horizontal support level. This indicates an increase in selling pressure as traders sell their holdings to lock in gains.
Cardano Descending Triangle. Source: TradingView
Buying pressure boosts ADA and signals possible bullish breakout
However, the resurgence in demand for ADA over the past 24 hours has pushed its price towards the upper line of the triangle, positioning it to potentially break above. When an asset’s price approaches the upper line of a descending triangle, it signals a potential retest of resistance within a bearish continuation pattern. A successful break above this line would signal a bullish reversal and confirm the strength of the uptrend.
According to readings from ADA’s daily chart, such a breakout could occur soon as buying pressure gains momentum. For instance, the cryptocurrency’s Elder-Ray Index returned a positive value for the first time since December 13, further confirming this bullish outlook. Currently, the indicator is at 0.057.
An asset’s Elder-Ray Index measures the strength of its buyers and sellers in the market. As with ADA, a positive value indicates bullish pressure, suggesting that buyers are taking over and pushing prices higher.
Cardano Elder Ray Index and MACD. Source: TradingView
Additionally, ADA’s MACD line (blue) is about to break above its signal line (orange). This setup indicates a potential bullish crossover, signaling an increase in the prevailing uptrend. It suggests that buying pressure is gaining strength and often precedes an uptrend in prices.
Price prediction
ADA is trading at the upper line of its descending triangle at $0.92. Strengthening buying activity suggests a potential breakout above this critical resistance level, which could propel the price above $1.
ADA Price Analysis. Source: TradingView
However, a failed attempt to break above the $0.92 resistance could reaffirm the bearish trend, erasing recent gains. In such a scenario, the price could drop to the $0.84 support level, invalidating the bullish outlook.
The article Volume Could Drive 2-Year High in Cardano (ADA) – Analysis appeared first on BeInCrypto Brasil.
