In Summary
ADA’s trading volume hit $1.22 billion, fueling a nearly 10% surge as the coin approaches a crucial resistance level at $0.92.
Technical indicators, including the MACD and Elder-Ray Index, signal a potential bullish breakout that could propel ADA to a two-year high of $1.32.
Failure to overcome the resistance level could reverse the upward momentum, pushing ADA back to $0.84 and invalidating the bullish scenario.
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Cardano (ADA) price has seen a significant surge in the last 24 hours, rising nearly 10% amid a spike in trading activity. This rally is backed by increased demand for the altcoin, reflected in its rising trading volume, which surpassed $1 billion in the period under review.
Technical analysis suggests that if buying pressure is sustained, Cardano’s price could reclaim its two-year high of $1.32. Here’s how that could happen.
Cardano Poised for a Breakout from Descending Triangle Pattern
BeInCrypto’s assessment of the ADA/USD daily chart reveals that Cardano has been trading within a descending triangle pattern since December 3rd, when it reached a two-year high of $1.32. This bearish pattern forms when the price of an asset creates a series of lower highs while maintaining a horizontal support level. It indicates increasing selling pressure as traders unload their holdings to take profits
However, the resurgence in demand for ADA over the past 24 hours has pushed its price to the upper boundary of the descending triangle, positioning it for a potential breakout. When the price of an asset approaches the upper trendline of a descending triangle, it signals a potential retest of the resistance level in a bearish continuation pattern. A successful break above this line would signal a bullish reversal and confirm the strength of the uptrend.
According to indicators from ADA’s daily chart, this breakout could be imminent as buying pressure intensifies. For instance, the coin’s Elder-Ray Index has returned a positive value for the first time since December 13th, further solidifying this bullish outlook. At the time of writing, this index stands at 0.057. An asset’s Elder-Ray Index measures the strength of buyers and sellers in the market. As with ADA, a positive value indicates bullish pressure, suggesting that buyers are in control and pushing the price higher.
Furthermore, ADA’s MACD line (blue) is preparing to cross above its signal line (orange) at the time of writing. This setup indicates a potential bullish crossover, signaling increasing upward momentum in the asset’s price. It suggests rising buying pressure and is often interpreted as a precursor to an uptrend.
ADA Price Prediction: Breakout or Correction?
ADA is currently trading at the upper trendline of the descending triangle pattern at $0.92. Strong buying activity suggests a potential breakout above this crucial resistance level, which could propel Cardano’s price to a two-year high.
However, failure to break above the $0.92 resistance level could reaffirm the downtrend, erasing ADA’s recent gains. In this case, the price may fall back to the $0.84 support level, invalidating the bullish outlook.
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