- Cardano price action is recovering from the whipsaw price action over the weekend and this week thus far.
- ADA price is in search of support and could be seen retracting a bit.
- Once support is met, expect a continuation of the rally towards $0.687.
Cardano (ADA) price action is puzzling as, on the one hand, a continuation of the summer rally is still very much granted, but unfortunately, the recent pullback has not made it all the way back toward that green ascending trend line that has been providing support and and a level for price action to bounce off in the past. Traders are assessing the situation and trying to decide if they should add to their positions now or await a test on the technical trend line with the risk of missing the boat. From the looks of it, with the elevated Relative Strength Index (RSI), it looks best to wait for a pullback to $0.540 to enter and sit on the rally towards $0.687, which is the base of the bullish triangle ADA price is currently trading in.
ADA price set to pop after support flows in
Cardano price action has been having difficulties with the monthly R1 resistance level at $0.580 and is at risk of forming a double top which would see a short-term squeeze to the downside. Although this is perceived to be bearish, it would be good for price action to drop back towards support from the green ascending trend line. That technical element would provide a better entry and see the demand-side blow up on orders, triggering a more concise move in the price action on the rally.
ADA price will see the RSI with its small step back cool down as well, which will only add to the incentive for bulls to jump into the price action once it trades near the green ascending trend line. From that level the rally will make more sense and is viable to get to the $0.687 baseline which is the High Of Day (HOD) from Feb 06, 2021. Alongside that move, it means a 23% increase in price evaluation, even before the bullish breakout of the triangle.
ADA/USD Daily chart
As mentioned above, letting the double top form is a bit of a gamble by bulls as bears will seize that moment to push price action back down. Should that momentum pick-up speed it will likely be helped by global markets being on the back foot, which could mean a possible break of that green supporting trend line. If that breaks, expect bears to jump in on occasion and see ADA price being swamped with sell orders, triggering a minimal 10% drop before finding initial support at the 55-day Simple Moving Average (SMA) and the monthly pivot around $0.492.
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