Cardano (ADA) price action points to a possible trend change

Cardano (ADA) has been showing signs of a potential trend change recently. But after rallying an impressive 48% from its June lows, ADA price faces significant hurdles to consolidate its bullish trend.

Cardano (ADA) Price Analysis

The patience of Cardano enthusiasts has been tested as the price of ADA has seen many ups and downs. After the June drop to $0.221, Cardano launched an impressive 48% rally, fueled by positive sentiment generated by Ripple’s legal dispute with the SEC. During this period, the price climbed up to the 61.8% Fibonacci retracement level, fueling the enthusiasm of the bulls.

However, the euphoria soon waned as the buying side struggled to stabilize above the 200-day EMA (blue). ADA later recovered to the important breakout level of $0.30, where the bulls regained their footing and lifted the price above the EMA50 (orange).

Bullish ADA Price Target

To further improve the short-term outlook, the ADA needs to clear a few key hurdles. The first major resistance lies at the 38.2% Fib retracement level of the $0.328 level. A successful push beyond this level could open the way for an attack towards the $0.355 mark, where the 200-day EMA is its most important challenge.

However, this may require more positive news from the broader crypto market, bitcoin, or the Ripple legal battle with the SEC. Only when the buy side can retest the 200-day EMA on the daily close, the potential for a near-term trend reversal increases significantly.

A sustained break of the 61.8% Fibonacci retracement level at $0.38 is needed for a true bullish trend reversal. This milestone will increase the chances of retesting last week’s high. For this, a breakout above the critical area between $0.361 and $0.38 would signal a trend reversal for the bulls.

If successful, ADA price could move towards a local high at $0.399. Then, the next target becomes the 78.6% Fibonacci retracement level at $0.415. Here, the fate of Cardano’s upward trajectory will be decided, with a possible push towards the yearly high of $0.463 on April 15. However, prudent investors should be prepared to take profits if ADA reaches this level.

Beyond this point, an ongoing bullish scenario opens up possibilities to target the September 10, 2022 local high at $0.524. And if the bullish momentum remains strong, the August 2022 high of $0.590 could become the next objective.

bearish price target

Although the uptrend is clear, a permanent market structure change is yet to be confirmed. The bears made their appearance on July 15, holding ADA price below the “bear line” indicated by the 200-day EMA. However, the recent 21% correction has seen the buy side regain control, at least for the time being.

To initiate another selloff, bears need a daily close below the 50-day EMA at $0.311. Until that happens, the bulls can feel relatively secure in their position. Failure to do so could lead to a retest of the support area between $0.30 and the 23.6% Fib retracement level at $0.296, with a further correction towards the $0.266 support area.

The Relative Strength Index (RSI) initially rose to 72 but has since settled in the neutral zone at 54. Generating a fresh buy signal would be crucial for a massive price move, as an overheated RSI usually accompanies substantial rallies. On a positive note, the MACD indicator crossed the 0-line to trigger a new long signal, increasing short-term optimism.

Featured Image from iStock, Chart from Tradingview.com